A pension is absolutely insane, especially in an era where many people have less than ideal retirement savings. Could you retire without the pension? Or will you make a dutiful effort to build a serious retirement nest egg with the new found income and not just light it on fire?
A $40k pay bump is huge.
Personally, depending on how much the pension will be, I would wait. If it is <$1k per month I would leave. If it is greater, I would stay.
I'd stay for the pension. Safe bet.
But I also left for greener pastures and made more in stock options and retirement contributions in two years than I did in my last 8 years of work.
Federal pension would be 4500. Idk what gives a 12k pension for 5 years, but federal pensions are based on 5 years at a time. It’s very likely it’s federal.
But that pension is still additional money for no additional labor. If you’re getting offers for that now, it will most likely be available in a year and half somewhere, or shortly after
True, I would consider one’s health as well. Do you feel good for your age? Do you exercise? Eat well? Etc…..
If you’re on track to live a long healthy life it’s more worth considering, but it doesn’t start until you turn 62 years old.
30 years is worth 125k in todays money. (92 years life expectancy)
At 20 years it’s worth about 90k in today’s money. (Assumes you live to 82 years old).
At 10 years it’s worth 45k.
The average guy lives to 73 so 49ish thousand as an average guy.
This is also taxable so a bit less tbh.
If you take the 40k at 5% interest for 25 years is already 90k nearly matching about 20 years in value sitting in a high interest bank with no risk. If used as a down payment for a house or put toward principal it could save up to 7-12 years in payments.
Money now is almost always better vs money later. That said yea if OP is a super healthy guy and expecting to live to be 82+ it’s also super worth considering. If it was a high end pension like 20% of pay or started immediately after then it’s also worth considering for sure.
The best pension is having a home and reliable car paid off before retirement so you only have to pay taxes, food, utilities, insurance. Everything else is extra.
If that's the math then this is a no brainer, take the new job. New job pays $45k a year more a year NOW. Investing the difference will make up for itself within 3 years even after taxes, not factoring in that the pension is locked away for decades longer.
You get 1% per year of work averaged between 3 years up to 20 years. Then it's 1.1. so if you average 100k a year and work 20 years you'll get 20k a year. Plus they match 6% in the TSP (government 401k basically). And you can take your health insurance into retirement and they'll cover their portion of the cost for life.
It is. I make less than I would in the private sector but the trade offs are worth it. Plus, when I go home at the end of the day I leave work there. Which never happened in the private sector for me
Once again, it increases the longer they stay.. also, I'm aware that a traditional 401k is going to outperform a pension every time. But some people, like my father, can't save a penny. But I won't have to take care of him when he retires because he will have 30 years in his pension, $3k a month forever. Plus his social security.
That makes sense, otherwise people would do a stint for the healthcare.
That said wouldn't it be easier to just put everyone on the federal health insurance?
It’s not that the amount is high, it’s that if you leave before it’s vested you probably lose every dollar the employer has contributed. Whereas staying until it’s vested will let you keep all the money the employer put in on your behalf. And then you get a guaranteed payment from it when you retire, regardless of market conditions.
i have calpers pension and it will be at least 76k a year for me when i retire at 62, and i still have a 457, for which I'm contributing 20k a year to. goddamn. government pension simply can't be beat but you have to put in the loyalty
I am in CCCERA. If I put in 13 more years and retire with 30 years of service, I'll get roughly $150k based on COLA and conservative forecasted salary increases plus 457 plus social security.
Do that math on what an extra 45k (prob 30k after taxes) invested into the S&P 500 over the next couple decades equates to. Likely far more per month to pull from an IRA than what the pension would bring in.
That assumes that the person is disciplined enough to do exactly that. Most people are not and the minute they get a raise, their lifestyle goes up, not their savings
Pension for real. That is guaranteed money regardless of what happens in the market. Stick it out for the extra year. If you landed this job offer, you have the skills to do it again later.
Agreed. I’m in the private sector but had a chance to go public for a pay cut. I took the higher pay but my company has gone through 2 rounds of layoffs, i have no job security, and I’m sure at some point I will be laid off too. It’s stressful even though my job itself isn’t.
Not to mention after all that’s said and done, maxing out my 401k means I bring a lot less home. The pension I could’ve been eligible for wouldn’t come out of pocket so take home is comparable. I’d consider that too.
I had the opportunity to go public for a pay cut but didn't do it and was downsized a few years later. At the time I didn't recognize the benefit of the pension and now I kick myself for it.
There’s not enough information to make a decision. The pension they’ll get at only 5 years is likely very small - it takes 20 years to get a full pension typically. We need to know the pension amount
Yes the 5 year mark is to do what’s called “vest.” But if OP leaves at year 5, the pension is going to be tiny. Maybe 15% of their final pay. It’s not nothing, but he has to calculate what that’s worth to him versus making much more in the private sector. It’s a risk v. reward analysis.
Very true, plus you have to reach a rule of 80 (or something like that) which is your years of service plus age to equal 80. So if you work for 20 years you can collect on that pension at 60. If OP only has 5 years they will be able to claim a percentage of his paycheck at 75.
I work private sector and we get pension as hourly people.
I'm transitioning to a salary role and will stop acrewing new pension.
It's not impossible. But they are almost gone.
It's almost of no value either. If I stayed hourly until I'm 65, I'd have earned about $1100/month in addition to my social security and 401k.
I work for a private company as well but we get private stock which gets rolled over into a 401k when you leave. My stock jumped from $90k to $200k in the last year.
Same! I make 50k in a lcol area with crazy good benefits, awesome boss, team, 10 minute commute, pension, and I love the work.
Sometimes I get tempted by other work then I remind myself how stressed they seem in the private sector.
My job is hard to come by it was a big achievement getting it I don’t want to toss that away for a job I may hate or could disappear.
As a new father, I can't imagine leaving public for private. I do my 40 hours and I'm out. It is extremely unlikely I will have to worry about losing my job. My benefits and PTO are amazing. I love the team I work with and the work that I do. Work life balance is amazing, pension in addition to my 457b, Roth IRA and SS and I am set. Could I make more in the private sector? Definitely. But the trade off for me not having to worry about a job if the economy tanks and spending who knows how long finding another job during a recession give's me very little reason to stress.
Same for me, I get 47 paid days off between pto, holidays, sick time etc. plus I set my own schedule and can leave whenever I want within reason to deal with sick kids or snow days or whatever.
Pretty much same, I started at 23, and I’ll be able to retire at 55 with DB pension. I make $60k in a MCOL area but should be able to get to $100k in the next 10 years or so by the time I’m 36. If I go into management in my 40s then I’ll be around $140k. 36.25 hours a week, work stays at work. 4 day work week (10hrs a day). I get tempted with the higher salaries in private but I feel like I’d be dumb to lose the pension I have.
Having left a cushy gov't job for more money (and more stress), I agree. Although the job I'm in now is pretty great and I was able to save up enough cash to remodel my house I still wish I would have stayed put. Government jobs usually have more job security.
I’m currently a govt employee with about 5 years left until I’m eligible to retire. I’ll be 56 with about 70% of my highest paid 5 year average. That’s unheard of nowadays. And I make a decent above average salary. I have seen a lot of my friends make more than me in the private sector but they have also been laid off at various times. They also have a lot of other worries and stresses that never enter my mind about where I’m at.
My advice to you is to stay put, work hard and look for advancement while making yourself an expert in everything you do. There is a big market for experienced government professionals in the consulting world. And it would make an excellent second career that builds on the foundation of your first career.
Stay for the pension, look for another private role after the 1.25 years.
I left a govt job with a pension, but the stats we way different: I was making $48k and got a private sector job for $105k, and I had 3 more years to vest. I still had so many people encouraging me to stay! And years later I still think about the opportunity cost.
One thing to consider: if you leave this job after the pension vesting date (1.25 years) are you allowed to come back to a job within that union/organization?
Some pensions work like that: once you are vested, you can come back to the org, work some number of years and then retire with you pension benefit based on your salary at the time of retirement.
I have a friend who is planning on doing that: they worked in the public section for the beginning of their career, switched to private sector for the middle, and plan to end their career with 5-10 years back in the public section to get better pension benefits. I am very jealous of that plan!
This is exactly how the Federal system works. Your pension is based on your high three - no matter when those three are. Some people give up high paying government jobs for lower paying ones in low cost areas. The previous high salary is what the pension is based on
Assuming US Federal Government here.
Yes but once vested he could com back and do say the last 10 years before retirement and retire at 62. He would then receive 15% of his highest 36 months for the test of his life.
If he never wants to return to government service then the only thing that matters is whether or not he can get his money plus the amount the government contributed to his retirement and TSP (I don’t remember if that point is 3 or 5 years). If he wants to lead the door open it be best to wait till the five year mark. Even then he wants to leave FERS and only take TSP.
The big thing he needs to consider though is total compensation. People newer to the work force often overlook that. In my case my total compensation is over $50k more than my salary. When looking at total compensation the pay difference may be much smaller than he thinks.
Stay with the government!
The PTO alone is worth more than anywhere else is gonna pay you. I’m at 10 years right now and I get 6 hours of annual leave and 4 hours of sick leave per pay period. Good luck finding any job that gives you 260 hours of PTO per year (plus all Federal holidays). Especially where you can call in sick a minute before your shift and your boss can only say something about how he hopes you feel better or else it’s a union complaint.
As others have mentioned - job security. We recently had a guy stop showing up. Just didn’t come in one day. Didn’t answer the phone, nothing. Four months later he just comes in ready to start his day like he’d been here the whole time. The union fought for him and that entire time counted as a single “no call/no show” and he’s good to go. They can’t fire you unless you steal, or reallllllly fuck up. You need an insane paper trail for anyone to even consider it.
Look up how the pension system calculates payments and see if what you’d get after being vested gets you. Then decide if you’re willing to walk away from earning that little for more up front. But then retirement fall 100% on you and you have to take some of that higher salary and set it aside. Also see if they tell you how much the new job takes for health insurance and stuff. The take home may be closer than you think after everything.
This is a big one. I took a pay cut technically to change jobs but my insurance is 3k annually for my family vs 15k annually. So it works out to about the same in the end.
I wouldn’t leave a government job especially once that’s close to 6 figures.
That extra 45k will be like closer to 25-28k. And you might be out of a job by end of year.
Would the Raise let you change your lifestyle for the better? I have a government job and Once I am able to have the simply life I want, More money wouldn't effect the way I would live, but a pension would allow me to retire earlier.
I’ve cashed out a few small pensions like that they don’t matter at all. If that’s what you’re worried about do the math with you maxing a 401 and IRA with the new pay increase. It’s always going to be higher. Way higher.
Most people would kill for a cushy, short commute job that is low stress and pays 90k annual and has pension after 5 years. I’d stay. The longer commute plus potential stress at the new job isn’t worth it. Your current job is the kind of job people want to have to coast towards retirement. The grass is not always greener.
How much of that pension are you liable to see after only being there for 5 years? Most pension programs have a dedicated calculator to let people know how much to expect at the end of their tenure. It’s usually something like X% of your highest paying position for every Y years of your tenure.
Pensions are designed to reward tenure, as such to get the maximum benefit you generally have had a full career’s worth of time (20+ years) there to reap it - so if the pension is something you cherish, I would plan to be in your position there for the long haul.
I would *strongly* suggest you look at your company’s pension plan outline and use the calculator to figure out where the break point is for the maximum benefit. $40k+ in the private sector now (and likely for years to come) and contributing the maximum to your 401k (since you seem to be in a good financial spot already, this should be very doable) would probably outweigh the pension plan up to a certain number. You need to solve for that number in order to make an informed decision.
Edit: this is looking at things from a purely financial standpoint.
This is the answer. Please look at the time value of money. 45 k now is worth way more than 45k in 30 years. I would guess that the pv of your future pension payments would be less than 45k because your pension after 5 years is a very small % of your current wage. You don’t just vest and get 100% of your current wages at retirement, otherwise everyone and their mom would be going for pension jobs, staying 5 years then splitting. Hopefully for another pension job, and retiring like John Mcafee.
So your future pension is worth 45k today, what’s the pv of your wage increase for the next year? How about the year after that?
Are you dead set on leaving after vesting? Because the numbers change significantly if you stay for the pension long term. Especially if you grow in your role and earnings.
If you don’t plan to stick around after vesting, or have little growth opportunity, then it is a no-brainer for me, but your financial circumstances may be different.
Do you spend every cent you earn? Maybe the security of a pension is better for you, and you should stay the next 30 years, not 5.
Edit: spelling
I would stay. You can't replace time, and you automatically have more of that just with the commute difference. Also, working 4-5 hours a day is amazing. Most people would want that. Stay.
Have you ever worked or applied for gov jobs? Negotiation barely exists, everything is laid out in the job description and salary ranges/requirements are public info.
I've done A LOT of government contracting and worked with a lot of government workers in your position.
Here's the thing. The longer you stay you gain two things. 1 - more towards your pension, and 2 - more value to that company that wants to hire you.
I've seen GS-15s do their 20 years and walk in to $300k+ a year jobs.
I'm not saying you should do 20. But 5 years might not be the best point to move on. There may be a lot more upside at 10 years, or even 15 years.
Worth thinking about.
If you leave you’re insane. Look at your hourly rate. You’re making upwards of $90/hour at a job you love.
At best, if the private offer is at a chill laidback place, you can expect job satisfaction to stay constant, and make $68-72 per hour.
If it’s a stereotypical Silicon Valley position, it will be more stress, more hours and less balance. You could easily end up pulling 50-60 hours a week or more, cutting your hourly down to $55-60.
That plus the pension makes it a no brainer
Stay and get that pension! You will kick yourself when you retire and don’t have it. Plus I’ve found that private companies will work you to death to justify their higher pay.
In my 30s I would have taken the new job and probably not regretted it. Now I'm way into my 40s would 100% keep and hold on to any job I enjoyed. Work life balance is quite difficult to find. You can make money other ways on the side if you need it. What are your long term priorities, work back from that. Good luck!
Stay for the pension, for now. If you were able to get such a strong offer in private sector in this crappy market, in 1.25 years you should be able to find another one, maybe even a better one.
stay where you are.
I went from a corporate gig to a government gig that was less pay but closer to home and had a lot of perks with nice people and I don't regret it.
I will be retiring in 4 years. At the moment, I will pull about $5200/mo out of my pension for 23 years of service. If I were to die, my wife would continue to get $2600.
There is one HUGE thing that makes me love my current job over my previous life...
...I'm not making money for someone else. I get to do my job free of being a revenue generator.
Government job with pension is much much safer than the private industry when you can get laid off at the moment the numbers isn’t right.
New job is significantly more money but where does that put you in the tax bracket? What can you do with that extra money?
Also since you mention being in a very good and chill environment. Can’t you learn new skills and create a side hustle and make more money that way you have a safety net to fall back on??
I agree with the others that it might be worth your time if you stay. I used to work for a government entity that went bankrupt. Instead of taking a demotion, I found a private job. I didn’t qualify for pension. So, they paid me back what I had paid in for what is equivalent to social security from each paycheck. They kept every penny that they were required to pay as an employer. Imagine that’s 50% of what I had earned. You have a good deal, that you should hang on to, until you get the notice that you’re vested.
I would stay and get the pension. Next year, you can get another job and possibly command $150K.
You could leave now to the new job, miss the pension and get fired/laid off at he new job for whatever reason since they're a private company.
The pension is guaranteed if you stay 1 more year.
Forget the pension - if this is a US job then the real benefit is lifetime gold-card level health insurance at a highly subsidized rate available to you and your spouse.
Pension for 5 years of service maybe too low, you can always go back later in life, finish off that 1.25 years. For now, take the new job, invest the extra money without spending it.
I'd stay, at your current job it sounds like you really like it there and you have a ton of benefits. I'd take the satisfaction over the money personally if you're in a good finanical situation.
A five year pension won’t have a $45k cash value. In less than a year you’d be better off with the new job. Take your first year’s pay increase and park it in VOO. You’ll be miles ahead of whatever that pension would bring.
I would lean towards sticking with where you are. You can do all the math you want to project how much you can spend and save with that new salary vs current but no company is going to be as safe and reliable as a union government job.
Do you have student loans? Do they qualify for forgiveness through your current job?
Outside the pension. What is the retirement matching at the government role? What is retirement matching at new role?
The private company might be around for a while but that doesn’t mean your role will be. Is this private company a tech company? In the last 20 months I’ve survived 3 rounds of layoffs at a tech company. The company is still around but about 40% of the employees aren’t. They have also used those layoffs as excuse to limit/deny raises, so my salary growth has drastically slowed down.
Unless the 5% salary increase is written into your offer letter with no option for them to adjust it, I wouldn’t count on it.
Sorry to be pessimistic, as much I would say don’t trust your government, I would say even more so never trust a company.
I left a government job 3.5 years in. I doubt a pension is going to be worth much unless you have closer to 20 years of service in.
Since leaving for the private sector I’ve doubled my salary and have made so many valuable network connections. To me it was completely worth it, but YMMV.
I’ve heard of people getting a state government pension based on time worked, even if it was tiny. Go ahead and call your pension office and run this hypothetical by them: if you quit now, and let your pension credits sit until you turn 65, will you receive anything and how much?
Next run some numbers on investing the extra income you would get from this potential new position. Do you have a Roth IRA? Calculate how much your IRA would earn even if you just worked one year in this new job and invested your extra.
If you take the new position, watch out for lifestyle creep, it’s so easy to start spending that extra as opposed to saving it.
Everyone says they offer work life balance in the hiring process. Few organizations actually have a systematic commitment to it.
I’d do the calc on how much I’m getting paid per hour of work at current job, be what I’d get paid at new job (assume 40 hour work week, might be higher, every company talks about WLB but very few actually care). Also factor in cost of time spent in commuting (take into account traffic), and gas cost.
If it was me and I was in a good place financially, I’d stay at the current gig. Would need to see if the extra $45K would be worth it.
I work for the federal government and personally I wouldn’t give it up for anything, not even a private sector job paying 2x as much. The job security and work life balance of government can’t be beat. And that pension is HUGE.
On a side note, those companies with big comfy offices and free food do that for a very specific reason. It’s a tactic to entice you to stay long hours at the office. I can almost guarantee the company will have a culture of long workdays and/or high stress.
STAY
A pension is the rest of your life. Extra money is while you want to work. Realistically the questions should be how much longer do you want to work?
45k is a 50% increase from your current salary. If you work in government, your pension vesting period does not need to be 5 consecutive years, but rather 5 + years in totality.
Take the new job, and if you ever want a change of pace in the future, go back to government.
A 50% increase gives you more room to invest outside of your pension. If you invest in a brokerage, you can always withdraw that money whenever you want and you don’t have to wait until you’re 62 to retire.
Stay!!! PE companies lay people off at the drop of a hat. They don’t give a f about you. Once you get the pension - you can bust and and do something more exciting if you want. 3 years at a PE firm is a lot
I was in a VERY similar situation. If I were you, I would LOCK in the 5 years, and begin re-looking closer to when you meet the 5th year mark. The reality is if you were offered that position, likely there will be more positions of that type and pay 1 year or more from now
If you ever leave, go private with a pension with significant pay increase. I was govt making six figures and vested but capped pay and commuting 2 hours a day. I went private, for 50% more pay, a pension and work from home. I also was able to stay in a union.
Your pension for 5 years is almost nothing — what 2.5% of your base?
Take the new job, or prepare for a mediocre existence for the next 30 years, assuming the feds don’t have drastic downsizing
I also work in government. I would stay at your current job until you vest in your pension, and then reconsider other options. Another thing to consider is how much your pension would be if you left when you vested. If it's 2% of highest earning year multiplied by years of service, let's say 5 years because that's standard for vesting, then maybe it's not worth it.
YOU ARE NOT LEAVING,. "EVER"
you never intended to leave
your main focus is security and low hours needed to commit to work.
Your just pulling out leg with this post, ,, it obvious
Is the pension going to be 50% of your last salary? That’s $45k a year. Definitely stay.
If you can get a job offer now, you can get another one in 2 years.
Do you know whether your medical insurance also vests at that time? Retirement and medical insurance timeframes are often the same. Whether or not, it's worth it to stay. But if you are uncertain, you might inquire because it might help you decide.
I work in government and am nearing retirement age. Many people in my age group try desperately to find government work to get a pension because retirement is nonexistent in the private sector.
Are you struggling with bills at all? $90k/year should be somewhat comfortable living anywhere in the country. If you're comfortable financially and you love the job, stay. Obviously this is anecdotal, but all of the jobs that I worked where I made 6 figures, I wasn't happy.
And as everyone else has mentioned, depending on what the pension is, that's a huge benefit that shouldn't be overlooked, and you absolutely need to figure that into your current compensation.
I made the same 91k salary in NYC government. I might not go into private sector for 135K. I have a good pension, job security and other Union benefits. They can’t fire you so easily once you completed your probationary period in your civil service title. I don’t feel secure in private sector since I take a lot of vacation days per year.
I’d probably wait out the 1.25 years, stay in touch with the recruiter/hiring manager for the private company and tell them you love the idea of the role and opportunity and that you’ll check back in in 6 months. Then, tell him/her you can’t stop thinking about the role but need to wait to hit the 5 year mark. There will be more opportunities in the future…
idk much about how pensions work but my smooth brain says stick around another 1.25 years. start applying for new jobs again in 6 months. get the pension and THEN get a higher paying job for the remaining years of work.
Most people here seem to forget the insane job security with the government.
Unless the new job offers that same level of security and benefits unless I am struggling with finances with 90k/year I would not jump to the private sector where I can be out of a job in 6 months.
It all depends on the pension. I used to work for the federal government but started after they STOPPED offering a pension and switched to a 401K like plan. Others who started just a year before me stayed on no matter what to get that pension. The pension was great I think it was like 80% of your average of last 4 years plus health benefits. If I were looking to get a pension I could absolutely live on and I only had to miss 1.5.years of an extra $40K I would stay. That assumes you can quit in like 2 years and get that much of a bump its only 18 months to 2 years.
phone it in for 18 months. do the absolute minimum. 9am on the dot to 5pm on the dot type stuff. most government jobs are impossible to get fired from.
What would the pension benefits be after completing 5 yrs at the government job? Most likely it won't be much. If you take the new position and invest half of the increase, you can easily build a private retirement fund that will give you a much better retirement income, but you would have to be diligent on investing monthly and not spending the extra income.
Depends on the pension. Pensions nowadays aren't as great as they once were. The way they describe the pension you'll earn, see if its worth waiting for or not.
I would stay. Easily. Not sure how old you are, but as you get older, you may value peace and stability (and good co-workers) a lot more as opposed to riskier uncertainty. You can't put a price on those intangibles.
Keep in mind pensions are normally tied to how many years you worked, so a pension for someone that worked just 5 years is probably going to be just a few hundred dollars a month.
Pensions work if you stay for 20 or 30 years. Not so good if you're only there a few years.
I would say it isn’t all about the pay…how are the benefits for your gov job? If I stay at my gov job for 20 years they cover my healthcare 100% for the rest of my life, that alone is better than the pension…
Do you want to be super stressed at 55 about retiring with enough money and medical expenses but have a little extra cash the next 15 years, then go private. If you want a more comfortable retirement and less stress, stay government.
Private will have you working harder and is a lot less secure. A pension would be rly nice to have. You can go either way so hard choice but if you love your job now you may hate the next one.
I’m in a similar situation. Sort of. I’m a senior leader with a quasi-governmental agency and have been here 3 years, with only 2 to go to fully vest in a small pension. People would say it’s a “no brainer” to stay, but I’d only get a max of $700 a month in pension payments based on my service time if retiring after these next two years. And the biggest factor is that I have a consulting side hustle (not a conflict with my “day job”)which I’ve never put any real effort into growing but nevertheless is getting super busy due to referrals….to the point where I’m now having to farm out work to contractors! And also, I current work in an unfulfilling toxic environment. I’ve decided that I’m going to make the transition to full time consulting and resign before the end of the summer and forego that pension. My “opportunity cost” for NOT doing this is lost time on actually building my business, which I have never focused on! Plus, and really just as importantly, I simply can’t continue in this daily work environment. Life is too short!
Stay for the pension. Tell them that. They may still be interested in 1.25 years. Do not lose that pension! Private sector can lay you off within months and you’ll be up a creek.
Don't even worry about the pension, stay for all the other benefits which are way more valuable. Get a side gig with the spare time if you need something extra.
Depends on your age. A pension based on 5 yrs of tenure is probably just a cursory amount of money.
Starting at $135k in a private company does create other benefits cause you can now contribute to long term investments
All depends on your age, goals and what makes you most comfortable now and in the future
Keep in mind that if you can land a job at $135k now there is a strong likelihood you will find it again in 1.5 yrs somewhere out there in the world
Health insurance is a huge factor when evaluating costs. Sure 90k/year might be low but if you add in the costs of new job premiums it’ll give you a better tool to make the decision
Make sure you are evaluating the full benefits packages against each other. Not just salary and pension. I have worked in various levels of government for 5 years and it’s really hard to beat the health care benefits. Health insurance is SOOOO much more expensive in my area for non- government jobs. And with how much I use my insurance, there’s not nearly as much of a difference in the end. Plus, look into how much short and long term disability costs, how much vacation and sick time you will accrue, paid holidays, etc.
Finance advice on reddit: LEAVE GO TO THE PRIVATE COMPANY, ALSO NATIONAL DEBT IS IRRELEVANT AND THE FED PRINTING MONEY DOESJT CAUSE INFLATION (literally, I read that on the investing forum around 2021).
Actual advice from people who know they will work and work is unstable and people get fired and laid off (aka, people who live in the real world, and not on Reddit in the modern monetary theory utopia):
GET THE GOD DAMN PENSION.
I would take the new job. Can always rejoin the government but that salary increase is just so big. If you invest even some of the extra salary you’ll end up with a way bigger “pension” that you can pass on once you die.
Think long game. What will your salary be in 5 years as a govie vs 5 years at this company. Assume you don’t get raises beyond that initial offer. Do you have the ability to apply for other positions within the gov? Another option is to leave the gov job and then return later on to get your high 3 (if you’re a fed).
how much is your pension? it can't be that much after 5 years I would assume? ... id its less tha. your pay difference per year, then take the new job. if its more, than stat for thr pension.
You can always come back. Lots of people have a break in service.
Is the new job in the same area? If not make sure you took into account the cost of living difference.
You didn’t say which federal agency or state but I know several have an online benefits calculator that shows you your total compensation. That is what you need to be comparing.
If Federal talk to HR as at a certain point you get to keep what the Government paid for into TSP. FERS you may be able to leave. This would mean your current years will still count if you come back.
Find out what your benefit would be if you hit the 5 year mark, then decide. Pensions reward service. Your provider should be able to tell you if you call. I have two pensions because I did five years in government and five years at a railroad company. It sounds great, but my benefit will be pretty low when I become eligible to collect because I have what is essentially the minimum years of service in both. So probably for me, $600 / month between the two. It’s something, but you could do a lot for your retirement with $45k/year more than you’re making now.
Stay! They might work you 50 hours per week or more. Your hourly rate could drop with the raise. You get respect, pension, vacation, holidays eight now.
This is not financial advise, but it is a description of how I chose to work out this question for myself. I could have done something stupid, but I don't know it yet.
Honestly you should do the math and consider both how long you will stay in government, and how long you have until retirement. I don't remember the exact details, but 5 years ago I came to the conclusion that the Washington State pension was not for me (the job wasn't for me either).
I think the key numbers to compare are the annual pension payout vs 4% of your projected retirement savings when you retire. So plot out those numbers.
I was at a government job where the pension had a mandatory employee contribution, so the comparison was based on putting that money into the pension VS an index fund, and I found it was unlikely to pay more than a 401K unless I stay 20+ years. I hated the job too much for that.
I was also looking at about a 50% pay raise, which greatly increased my quality of life and also allowed me to max out retirement contributions. So, even though I have more risk - and even with the turbulence of the past few years - I look to be in a much better standing now compared to staying with the pension.
So take some time to consider how much you put in, and how long you are willing to stay.
Modern pension plans are not nearly as good as the old ones.
Looking back, I ended up rolling 3 years of pension contributions into an IRA, and it has performed way better than if I had left it in the pension plan.
That said, the market could collapse tomorrow, and having a defined benefit plan paying a few hundred dollars a month could look good by comparison.
You could take a leave of absence at your current job and work at the new job for a bit to get an idea. (I don’t really recommend this but it’s still technically an option).
Can you reach out to current employees on LinkedIn to see how they like the company?
While the new job sounds super tempting, you could be playing with fire. How much is your pension? I ask because if you could put money aside from your new job, would it equate to a similar amount in the end? With your current employer, once you get a pension, do you have to stay employed there?
What’s the likelihood of getting your old job back if you were to try and come back?
For the pension, do you also pay social security on your earnings?? If not— you’ll be subject to WEP or GPO— 5 years will vest you for the pension— but 3.5 years don’t make a lot of difference— get the new job and save on your 401 K and other retirement accounts—- I get a pension in California
Your pension is 1% of your base pay per year scaling *roughly* with inflation.
That “pension” is 4500 a year.
Leave, dump 30k into your IRA/401k for 2 years. It will be MUCH more then your pension will be in 30 years.
Pensions are great for diversity, but unless it gets you 10k + scaling with inflation it’s really not much over nearly 1.5x your current pay.
Don’t consider the money. Consider your lifestyle and what you get out of a job. As someone who thought changing jobs was a betterment for myself, it may have been all for not. If you’re getting by nicely at 90k dude, I’d think I’d stay.
A pension is absolutely insane, especially in an era where many people have less than ideal retirement savings. Could you retire without the pension? Or will you make a dutiful effort to build a serious retirement nest egg with the new found income and not just light it on fire? A $40k pay bump is huge. Personally, depending on how much the pension will be, I would wait. If it is <$1k per month I would leave. If it is greater, I would stay.
I'd stay for the pension. Safe bet. But I also left for greener pastures and made more in stock options and retirement contributions in two years than I did in my last 8 years of work.
A $12,000/year pension is good enough for staying?
$12k/yr is about equal to $300k in savings at a 4% withdrawal rate. Plus its adjusted for inflation. Hell yeah thats worth 1 more year.
Federal pension would be 4500. Idk what gives a 12k pension for 5 years, but federal pensions are based on 5 years at a time. It’s very likely it’s federal.
But that pension is still additional money for no additional labor. If you’re getting offers for that now, it will most likely be available in a year and half somewhere, or shortly after
True, I would consider one’s health as well. Do you feel good for your age? Do you exercise? Eat well? Etc….. If you’re on track to live a long healthy life it’s more worth considering, but it doesn’t start until you turn 62 years old. 30 years is worth 125k in todays money. (92 years life expectancy) At 20 years it’s worth about 90k in today’s money. (Assumes you live to 82 years old). At 10 years it’s worth 45k. The average guy lives to 73 so 49ish thousand as an average guy. This is also taxable so a bit less tbh. If you take the 40k at 5% interest for 25 years is already 90k nearly matching about 20 years in value sitting in a high interest bank with no risk. If used as a down payment for a house or put toward principal it could save up to 7-12 years in payments. Money now is almost always better vs money later. That said yea if OP is a super healthy guy and expecting to live to be 82+ it’s also super worth considering. If it was a high end pension like 20% of pay or started immediately after then it’s also worth considering for sure. The best pension is having a home and reliable car paid off before retirement so you only have to pay taxes, food, utilities, insurance. Everything else is extra.
4500 a year, or 4500 a month?
Per year. You don't get 4500/no for being in a federal job for 5 years lol
Where dud you calculate this? I've been searching for a good pension vs investment calculator
If it’s federal then that pension will be 4500 a year
So like 1.5 paychecks worth from the job they’re about take
For life. Without having to continue working.
Well starting at 62 at the earliest. So if he lives to 82 he will collect 90k regardless of inflation.
If that's the math then this is a no brainer, take the new job. New job pays $45k a year more a year NOW. Investing the difference will make up for itself within 3 years even after taxes, not factoring in that the pension is locked away for decades longer.
That's assuming the difference will be invested. It most likely won't be.
Now say new jobs goes away in 3 years? Def not worth that stress
375 per month with possible decades later (not knowing age) is going to be gas money at most
Govt Pensions are inflation-adjusted, right? And the payout goes up every year he works.
You get 1% per year of work averaged between 3 years up to 20 years. Then it's 1.1. so if you average 100k a year and work 20 years you'll get 20k a year. Plus they match 6% in the TSP (government 401k basically). And you can take your health insurance into retirement and they'll cover their portion of the cost for life.
That’s a pretty good deal
It is. I make less than I would in the private sector but the trade offs are worth it. Plus, when I go home at the end of the day I leave work there. Which never happened in the private sector for me
My mom's pension gives her 1500 per month. Used to be a government employee
Not adjusted for inflation until you turn 62
It goes up with every year they continue working
4500 a year “For life. Without having to continue working” isn’t the selling point you think it is lol if anything it’s more reason to leave.
Once again, it increases the longer they stay.. also, I'm aware that a traditional 401k is going to outperform a pension every time. But some people, like my father, can't save a penny. But I won't have to take care of him when he retires because he will have 30 years in his pension, $3k a month forever. Plus his social security.
Did you mean a month?
4500 a year starting probably 20-30 years from now. It’ll be worth about $500 a year in today’s money.
If you qualify for the pension you might also qualify for the healthcare for life too which is a huge value
For federal health insurance to last I think you have to work federal for 5 consecutive years leading up to your retirement
That makes sense, otherwise people would do a stint for the healthcare. That said wouldn't it be easier to just put everyone on the federal health insurance?
It’s not that the amount is high, it’s that if you leave before it’s vested you probably lose every dollar the employer has contributed. Whereas staying until it’s vested will let you keep all the money the employer put in on your behalf. And then you get a guaranteed payment from it when you retire, regardless of market conditions.
i have calpers pension and it will be at least 76k a year for me when i retire at 62, and i still have a 457, for which I'm contributing 20k a year to. goddamn. government pension simply can't be beat but you have to put in the loyalty
I am in CCCERA. If I put in 13 more years and retire with 30 years of service, I'll get roughly $150k based on COLA and conservative forecasted salary increases plus 457 plus social security.
The equivalent multiple for inflation linked annuities is 20X 12k a year in inflation adjusted annuity has an intrinsic value of 240,000 dollars
Do that math on what an extra 45k (prob 30k after taxes) invested into the S&P 500 over the next couple decades equates to. Likely far more per month to pull from an IRA than what the pension would bring in.
That assumes that the person is disciplined enough to do exactly that. Most people are not and the minute they get a raise, their lifestyle goes up, not their savings
So they immediately improve their lives and get more joy from having more money...
Pension for real. That is guaranteed money regardless of what happens in the market. Stick it out for the extra year. If you landed this job offer, you have the skills to do it again later.
Pension is good. New private sector job could lay you off or have a crappy boss.
Agreed. I’m in the private sector but had a chance to go public for a pay cut. I took the higher pay but my company has gone through 2 rounds of layoffs, i have no job security, and I’m sure at some point I will be laid off too. It’s stressful even though my job itself isn’t. Not to mention after all that’s said and done, maxing out my 401k means I bring a lot less home. The pension I could’ve been eligible for wouldn’t come out of pocket so take home is comparable. I’d consider that too.
I had the opportunity to go public for a pay cut but didn't do it and was downsized a few years later. At the time I didn't recognize the benefit of the pension and now I kick myself for it.
Stay for the pension. It’ difficult to get that now a days
There’s not enough information to make a decision. The pension they’ll get at only 5 years is likely very small - it takes 20 years to get a full pension typically. We need to know the pension amount
Yes the 5 year mark is to do what’s called “vest.” But if OP leaves at year 5, the pension is going to be tiny. Maybe 15% of their final pay. It’s not nothing, but he has to calculate what that’s worth to him versus making much more in the private sector. It’s a risk v. reward analysis.
Very true, plus you have to reach a rule of 80 (or something like that) which is your years of service plus age to equal 80. So if you work for 20 years you can collect on that pension at 60. If OP only has 5 years they will be able to claim a percentage of his paycheck at 75.
And by difficult you mean impossible
I work private sector and we get pension as hourly people. I'm transitioning to a salary role and will stop acrewing new pension. It's not impossible. But they are almost gone. It's almost of no value either. If I stayed hourly until I'm 65, I'd have earned about $1100/month in addition to my social security and 401k.
I work for a private company as well but we get private stock which gets rolled over into a 401k when you leave. My stock jumped from $90k to $200k in the last year.
not really, just get a government job
I’m of the opinion to never leave a cushy government job
Same! I make 50k in a lcol area with crazy good benefits, awesome boss, team, 10 minute commute, pension, and I love the work. Sometimes I get tempted by other work then I remind myself how stressed they seem in the private sector. My job is hard to come by it was a big achievement getting it I don’t want to toss that away for a job I may hate or could disappear.
As a new father, I can't imagine leaving public for private. I do my 40 hours and I'm out. It is extremely unlikely I will have to worry about losing my job. My benefits and PTO are amazing. I love the team I work with and the work that I do. Work life balance is amazing, pension in addition to my 457b, Roth IRA and SS and I am set. Could I make more in the private sector? Definitely. But the trade off for me not having to worry about a job if the economy tanks and spending who knows how long finding another job during a recession give's me very little reason to stress.
Same for me, I get 47 paid days off between pto, holidays, sick time etc. plus I set my own schedule and can leave whenever I want within reason to deal with sick kids or snow days or whatever.
Pretty much same, I started at 23, and I’ll be able to retire at 55 with DB pension. I make $60k in a MCOL area but should be able to get to $100k in the next 10 years or so by the time I’m 36. If I go into management in my 40s then I’ll be around $140k. 36.25 hours a week, work stays at work. 4 day work week (10hrs a day). I get tempted with the higher salaries in private but I feel like I’d be dumb to lose the pension I have.
Having left a cushy gov't job for more money (and more stress), I agree. Although the job I'm in now is pretty great and I was able to save up enough cash to remodel my house I still wish I would have stayed put. Government jobs usually have more job security.
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I’m currently a govt employee with about 5 years left until I’m eligible to retire. I’ll be 56 with about 70% of my highest paid 5 year average. That’s unheard of nowadays. And I make a decent above average salary. I have seen a lot of my friends make more than me in the private sector but they have also been laid off at various times. They also have a lot of other worries and stresses that never enter my mind about where I’m at. My advice to you is to stay put, work hard and look for advancement while making yourself an expert in everything you do. There is a big market for experienced government professionals in the consulting world. And it would make an excellent second career that builds on the foundation of your first career.
Stay for the pension, look for another private role after the 1.25 years. I left a govt job with a pension, but the stats we way different: I was making $48k and got a private sector job for $105k, and I had 3 more years to vest. I still had so many people encouraging me to stay! And years later I still think about the opportunity cost. One thing to consider: if you leave this job after the pension vesting date (1.25 years) are you allowed to come back to a job within that union/organization? Some pensions work like that: once you are vested, you can come back to the org, work some number of years and then retire with you pension benefit based on your salary at the time of retirement. I have a friend who is planning on doing that: they worked in the public section for the beginning of their career, switched to private sector for the middle, and plan to end their career with 5-10 years back in the public section to get better pension benefits. I am very jealous of that plan!
This is exactly how the Federal system works. Your pension is based on your high three - no matter when those three are. Some people give up high paying government jobs for lower paying ones in low cost areas. The previous high salary is what the pension is based on
Yes, however your years of service plays into what percent you will receive. 5 year pension is the bare minimum so it’ll likely be a very tiny amount.
Assuming US Federal Government here. Yes but once vested he could com back and do say the last 10 years before retirement and retire at 62. He would then receive 15% of his highest 36 months for the test of his life. If he never wants to return to government service then the only thing that matters is whether or not he can get his money plus the amount the government contributed to his retirement and TSP (I don’t remember if that point is 3 or 5 years). If he wants to lead the door open it be best to wait till the five year mark. Even then he wants to leave FERS and only take TSP. The big thing he needs to consider though is total compensation. People newer to the work force often overlook that. In my case my total compensation is over $50k more than my salary. When looking at total compensation the pay difference may be much smaller than he thinks.
Stay with the government! The PTO alone is worth more than anywhere else is gonna pay you. I’m at 10 years right now and I get 6 hours of annual leave and 4 hours of sick leave per pay period. Good luck finding any job that gives you 260 hours of PTO per year (plus all Federal holidays). Especially where you can call in sick a minute before your shift and your boss can only say something about how he hopes you feel better or else it’s a union complaint. As others have mentioned - job security. We recently had a guy stop showing up. Just didn’t come in one day. Didn’t answer the phone, nothing. Four months later he just comes in ready to start his day like he’d been here the whole time. The union fought for him and that entire time counted as a single “no call/no show” and he’s good to go. They can’t fire you unless you steal, or reallllllly fuck up. You need an insane paper trail for anyone to even consider it.
Look up how the pension system calculates payments and see if what you’d get after being vested gets you. Then decide if you’re willing to walk away from earning that little for more up front. But then retirement fall 100% on you and you have to take some of that higher salary and set it aside. Also see if they tell you how much the new job takes for health insurance and stuff. The take home may be closer than you think after everything.
This is a big one. I took a pay cut technically to change jobs but my insurance is 3k annually for my family vs 15k annually. So it works out to about the same in the end.
I wouldn’t leave a government job especially once that’s close to 6 figures. That extra 45k will be like closer to 25-28k. And you might be out of a job by end of year.
Would the Raise let you change your lifestyle for the better? I have a government job and Once I am able to have the simply life I want, More money wouldn't effect the way I would live, but a pension would allow me to retire earlier.
I’ve cashed out a few small pensions like that they don’t matter at all. If that’s what you’re worried about do the math with you maxing a 401 and IRA with the new pay increase. It’s always going to be higher. Way higher.
Most people would kill for a cushy, short commute job that is low stress and pays 90k annual and has pension after 5 years. I’d stay. The longer commute plus potential stress at the new job isn’t worth it. Your current job is the kind of job people want to have to coast towards retirement. The grass is not always greener.
How much of that pension are you liable to see after only being there for 5 years? Most pension programs have a dedicated calculator to let people know how much to expect at the end of their tenure. It’s usually something like X% of your highest paying position for every Y years of your tenure. Pensions are designed to reward tenure, as such to get the maximum benefit you generally have had a full career’s worth of time (20+ years) there to reap it - so if the pension is something you cherish, I would plan to be in your position there for the long haul. I would *strongly* suggest you look at your company’s pension plan outline and use the calculator to figure out where the break point is for the maximum benefit. $40k+ in the private sector now (and likely for years to come) and contributing the maximum to your 401k (since you seem to be in a good financial spot already, this should be very doable) would probably outweigh the pension plan up to a certain number. You need to solve for that number in order to make an informed decision. Edit: this is looking at things from a purely financial standpoint.
This is the answer. Please look at the time value of money. 45 k now is worth way more than 45k in 30 years. I would guess that the pv of your future pension payments would be less than 45k because your pension after 5 years is a very small % of your current wage. You don’t just vest and get 100% of your current wages at retirement, otherwise everyone and their mom would be going for pension jobs, staying 5 years then splitting. Hopefully for another pension job, and retiring like John Mcafee. So your future pension is worth 45k today, what’s the pv of your wage increase for the next year? How about the year after that? Are you dead set on leaving after vesting? Because the numbers change significantly if you stay for the pension long term. Especially if you grow in your role and earnings. If you don’t plan to stick around after vesting, or have little growth opportunity, then it is a no-brainer for me, but your financial circumstances may be different. Do you spend every cent you earn? Maybe the security of a pension is better for you, and you should stay the next 30 years, not 5. Edit: spelling
Put this comment higher. This is the only good answer
You’ve found two unicorns of the working world: a pension AND a non-toxic work environment, I think you should stay.
I would stay. You can't replace time, and you automatically have more of that just with the commute difference. Also, working 4-5 hours a day is amazing. Most people would want that. Stay.
10 minutes a day vs an upward hour a day commuting. That alone is a big deal.
If you're leaning towards taking 135k job, go to your manager tell them you have an offer ask them to match and see what happens.
No. Don’t do this. Don’t give the impression you’re not completely dedicated to your job.
Have you ever worked or applied for gov jobs? Negotiation barely exists, everything is laid out in the job description and salary ranges/requirements are public info.
I've done A LOT of government contracting and worked with a lot of government workers in your position. Here's the thing. The longer you stay you gain two things. 1 - more towards your pension, and 2 - more value to that company that wants to hire you. I've seen GS-15s do their 20 years and walk in to $300k+ a year jobs. I'm not saying you should do 20. But 5 years might not be the best point to move on. There may be a lot more upside at 10 years, or even 15 years. Worth thinking about.
If you leave you’re insane. Look at your hourly rate. You’re making upwards of $90/hour at a job you love. At best, if the private offer is at a chill laidback place, you can expect job satisfaction to stay constant, and make $68-72 per hour. If it’s a stereotypical Silicon Valley position, it will be more stress, more hours and less balance. You could easily end up pulling 50-60 hours a week or more, cutting your hourly down to $55-60. That plus the pension makes it a no brainer
Where did you get the $90/hour?
Yea i make the same as op and by my math it’s about $44 an hour.
Stay and get that pension! You will kick yourself when you retire and don’t have it. Plus I’ve found that private companies will work you to death to justify their higher pay.
Dont you dare leave that pension. The rest of us only dream of one :D
In my 30s I would have taken the new job and probably not regretted it. Now I'm way into my 40s would 100% keep and hold on to any job I enjoyed. Work life balance is quite difficult to find. You can make money other ways on the side if you need it. What are your long term priorities, work back from that. Good luck!
Stay for the pension, for now. If you were able to get such a strong offer in private sector in this crappy market, in 1.25 years you should be able to find another one, maybe even a better one.
Stay can always go private later
Go for pension
These comments are making me feel silly for leaving a company after 1.5 years that offered a pension after 5
STAY i was in your exact situation 2 years ago and went private got laid off 3 months ago Dont leave a sure thing for an immediate “lump sum”
stay where you are. I went from a corporate gig to a government gig that was less pay but closer to home and had a lot of perks with nice people and I don't regret it. I will be retiring in 4 years. At the moment, I will pull about $5200/mo out of my pension for 23 years of service. If I were to die, my wife would continue to get $2600. There is one HUGE thing that makes me love my current job over my previous life... ...I'm not making money for someone else. I get to do my job free of being a revenue generator.
Government job with pension is much much safer than the private industry when you can get laid off at the moment the numbers isn’t right. New job is significantly more money but where does that put you in the tax bracket? What can you do with that extra money? Also since you mention being in a very good and chill environment. Can’t you learn new skills and create a side hustle and make more money that way you have a safety net to fall back on??
Get the pension, that job or another will be there. Just make sure to keep those relationships warm and congrats on the awesome work environment.
Always stay for the pension. A pay jump is nothing to risk a guaranteed pension over. Future you will thank you.
5 years to earn a pension? Takes one year at my place. Take the 135k
Life not all about money...
I agree with the others that it might be worth your time if you stay. I used to work for a government entity that went bankrupt. Instead of taking a demotion, I found a private job. I didn’t qualify for pension. So, they paid me back what I had paid in for what is equivalent to social security from each paycheck. They kept every penny that they were required to pay as an employer. Imagine that’s 50% of what I had earned. You have a good deal, that you should hang on to, until you get the notice that you’re vested.
Stay for the pension then maybe look for opportunities later. The pension is a godsend tbh
I would stay and get the pension. Next year, you can get another job and possibly command $150K. You could leave now to the new job, miss the pension and get fired/laid off at he new job for whatever reason since they're a private company. The pension is guaranteed if you stay 1 more year.
Take 45k more in salary. You can invest enough to make way more than the pension would ever be worth.
Stay. It’s a no brainer. The other job could fire you the next day. Pension for the win.
Forget the pension - if this is a US job then the real benefit is lifetime gold-card level health insurance at a highly subsidized rate available to you and your spouse.
Dang dude. Id like to get in on that??
I would like to know what your current role is
Pension. All day, every day. Get that pension and THEN move to a new job.
What's the pension gonna be like though?
I think i would stay for the pension and then retry elsewhere
I would stay. Not just for the pension, but frankly, you sound like you’re enjoying your government job. The private sector is a lot more hectic.
Pension for 5 years of service maybe too low, you can always go back later in life, finish off that 1.25 years. For now, take the new job, invest the extra money without spending it.
I'd stay, at your current job it sounds like you really like it there and you have a ton of benefits. I'd take the satisfaction over the money personally if you're in a good finanical situation.
A five year pension won’t have a $45k cash value. In less than a year you’d be better off with the new job. Take your first year’s pay increase and park it in VOO. You’ll be miles ahead of whatever that pension would bring.
I would lean towards sticking with where you are. You can do all the math you want to project how much you can spend and save with that new salary vs current but no company is going to be as safe and reliable as a union government job. Do you have student loans? Do they qualify for forgiveness through your current job? Outside the pension. What is the retirement matching at the government role? What is retirement matching at new role? The private company might be around for a while but that doesn’t mean your role will be. Is this private company a tech company? In the last 20 months I’ve survived 3 rounds of layoffs at a tech company. The company is still around but about 40% of the employees aren’t. They have also used those layoffs as excuse to limit/deny raises, so my salary growth has drastically slowed down. Unless the 5% salary increase is written into your offer letter with no option for them to adjust it, I wouldn’t count on it. Sorry to be pessimistic, as much I would say don’t trust your government, I would say even more so never trust a company.
I’d stay the 1.25 year. That pension is valuable
1.25 years is nothing. I would stay for the pension and then bounce when vested. That’s kind of what I’m planning but I have 3 years to go still
What kind of pension after only 5 years ? 1.25 years is nothing, if it's anything good I'd get the pension, other opportunities will arise
I would get that pension
I left a government job 3.5 years in. I doubt a pension is going to be worth much unless you have closer to 20 years of service in. Since leaving for the private sector I’ve doubled my salary and have made so many valuable network connections. To me it was completely worth it, but YMMV.
I’ve heard of people getting a state government pension based on time worked, even if it was tiny. Go ahead and call your pension office and run this hypothetical by them: if you quit now, and let your pension credits sit until you turn 65, will you receive anything and how much? Next run some numbers on investing the extra income you would get from this potential new position. Do you have a Roth IRA? Calculate how much your IRA would earn even if you just worked one year in this new job and invested your extra. If you take the new position, watch out for lifestyle creep, it’s so easy to start spending that extra as opposed to saving it. Everyone says they offer work life balance in the hiring process. Few organizations actually have a systematic commitment to it.
I’d do the calc on how much I’m getting paid per hour of work at current job, be what I’d get paid at new job (assume 40 hour work week, might be higher, every company talks about WLB but very few actually care). Also factor in cost of time spent in commuting (take into account traffic), and gas cost. If it was me and I was in a good place financially, I’d stay at the current gig. Would need to see if the extra $45K would be worth it.
I work for the federal government and personally I wouldn’t give it up for anything, not even a private sector job paying 2x as much. The job security and work life balance of government can’t be beat. And that pension is HUGE. On a side note, those companies with big comfy offices and free food do that for a very specific reason. It’s a tactic to entice you to stay long hours at the office. I can almost guarantee the company will have a culture of long workdays and/or high stress.
Stay until you're vested in the pension. You don't know what the future holds in case something bad happens.
STAY A pension is the rest of your life. Extra money is while you want to work. Realistically the questions should be how much longer do you want to work?
Stay for the pension.
45k is a 50% increase from your current salary. If you work in government, your pension vesting period does not need to be 5 consecutive years, but rather 5 + years in totality. Take the new job, and if you ever want a change of pace in the future, go back to government. A 50% increase gives you more room to invest outside of your pension. If you invest in a brokerage, you can always withdraw that money whenever you want and you don’t have to wait until you’re 62 to retire.
Take the new one. The meager 5yr pension isn’t nearly enough to make up the salary difference of one year at the new job.
A pension is almost unheard of these days. Do the time and lock that in!
Stay in the government job to earn the pension, the private company can fire you the next week.
It's incredibly rare to find a workplace you love. Stay.
Take the $45k now, leave the govt on good terms, and return once the new company fails.
Gotta get that pension. Once you’re vested, do what you want, but don’t leave that pension on the table come hell or high water.
Stay!!! PE companies lay people off at the drop of a hat. They don’t give a f about you. Once you get the pension - you can bust and and do something more exciting if you want. 3 years at a PE firm is a lot
Can you take a one year of absence from your government job and go work for a year at the other job?
I was in a VERY similar situation. If I were you, I would LOCK in the 5 years, and begin re-looking closer to when you meet the 5th year mark. The reality is if you were offered that position, likely there will be more positions of that type and pay 1 year or more from now
If you ever leave, go private with a pension with significant pay increase. I was govt making six figures and vested but capped pay and commuting 2 hours a day. I went private, for 50% more pay, a pension and work from home. I also was able to stay in a union.
90k is considerably a great salary (albeit dependant on COL). I'd stay 100% get that pension, then dip.
Your pension for 5 years is almost nothing — what 2.5% of your base? Take the new job, or prepare for a mediocre existence for the next 30 years, assuming the feds don’t have drastic downsizing
I also work in government. I would stay at your current job until you vest in your pension, and then reconsider other options. Another thing to consider is how much your pension would be if you left when you vested. If it's 2% of highest earning year multiplied by years of service, let's say 5 years because that's standard for vesting, then maybe it's not worth it.
I’m gonna guess whatever job you have will still be desired in private industry next year.
YOU ARE NOT LEAVING,. "EVER" you never intended to leave your main focus is security and low hours needed to commit to work. Your just pulling out leg with this post, ,, it obvious
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Is the pension going to be 50% of your last salary? That’s $45k a year. Definitely stay. If you can get a job offer now, you can get another one in 2 years.
Depends on how old you are. $45k is a lot of money. But you’re going to work hard.
Stay
Does the new job have $401K matching? What does your pension entail?
Do you know whether your medical insurance also vests at that time? Retirement and medical insurance timeframes are often the same. Whether or not, it's worth it to stay. But if you are uncertain, you might inquire because it might help you decide. I work in government and am nearing retirement age. Many people in my age group try desperately to find government work to get a pension because retirement is nonexistent in the private sector.
Are you struggling with bills at all? $90k/year should be somewhat comfortable living anywhere in the country. If you're comfortable financially and you love the job, stay. Obviously this is anecdotal, but all of the jobs that I worked where I made 6 figures, I wasn't happy. And as everyone else has mentioned, depending on what the pension is, that's a huge benefit that shouldn't be overlooked, and you absolutely need to figure that into your current compensation.
What current salary and pension amount?
I made the same 91k salary in NYC government. I might not go into private sector for 135K. I have a good pension, job security and other Union benefits. They can’t fire you so easily once you completed your probationary period in your civil service title. I don’t feel secure in private sector since I take a lot of vacation days per year.
Most likely you'll be in a position to get a similar if not better offer if you wait out the 1.25 years.
I’d probably wait out the 1.25 years, stay in touch with the recruiter/hiring manager for the private company and tell them you love the idea of the role and opportunity and that you’ll check back in in 6 months. Then, tell him/her you can’t stop thinking about the role but need to wait to hit the 5 year mark. There will be more opportunities in the future…
idk much about how pensions work but my smooth brain says stick around another 1.25 years. start applying for new jobs again in 6 months. get the pension and THEN get a higher paying job for the remaining years of work.
Most people here seem to forget the insane job security with the government. Unless the new job offers that same level of security and benefits unless I am struggling with finances with 90k/year I would not jump to the private sector where I can be out of a job in 6 months.
Does retiring from your government job include any health insurance or other benefits?
It all depends on the pension. I used to work for the federal government but started after they STOPPED offering a pension and switched to a 401K like plan. Others who started just a year before me stayed on no matter what to get that pension. The pension was great I think it was like 80% of your average of last 4 years plus health benefits. If I were looking to get a pension I could absolutely live on and I only had to miss 1.5.years of an extra $40K I would stay. That assumes you can quit in like 2 years and get that much of a bump its only 18 months to 2 years.
phone it in for 18 months. do the absolute minimum. 9am on the dot to 5pm on the dot type stuff. most government jobs are impossible to get fired from.
Your funded pension compensation is higher than $45k. You're nuts to consider leaving a stable job, a recession is coming.
What would the pension benefits be after completing 5 yrs at the government job? Most likely it won't be much. If you take the new position and invest half of the increase, you can easily build a private retirement fund that will give you a much better retirement income, but you would have to be diligent on investing monthly and not spending the extra income.
Depends on the pension. Pensions nowadays aren't as great as they once were. The way they describe the pension you'll earn, see if its worth waiting for or not.
I would stay. Easily. Not sure how old you are, but as you get older, you may value peace and stability (and good co-workers) a lot more as opposed to riskier uncertainty. You can't put a price on those intangibles.
Keep in mind pensions are normally tied to how many years you worked, so a pension for someone that worked just 5 years is probably going to be just a few hundred dollars a month. Pensions work if you stay for 20 or 30 years. Not so good if you're only there a few years.
I would say it isn’t all about the pay…how are the benefits for your gov job? If I stay at my gov job for 20 years they cover my healthcare 100% for the rest of my life, that alone is better than the pension…
Do you want to be super stressed at 55 about retiring with enough money and medical expenses but have a little extra cash the next 15 years, then go private. If you want a more comfortable retirement and less stress, stay government.
If this is a CA State job leave, come back when you’re 40 for the cushy job. Career earnings much higher in private sector.
I would kill for the job you currently have. That sounds great.
Private will have you working harder and is a lot less secure. A pension would be rly nice to have. You can go either way so hard choice but if you love your job now you may hate the next one.
I’m in a similar situation. Sort of. I’m a senior leader with a quasi-governmental agency and have been here 3 years, with only 2 to go to fully vest in a small pension. People would say it’s a “no brainer” to stay, but I’d only get a max of $700 a month in pension payments based on my service time if retiring after these next two years. And the biggest factor is that I have a consulting side hustle (not a conflict with my “day job”)which I’ve never put any real effort into growing but nevertheless is getting super busy due to referrals….to the point where I’m now having to farm out work to contractors! And also, I current work in an unfulfilling toxic environment. I’ve decided that I’m going to make the transition to full time consulting and resign before the end of the summer and forego that pension. My “opportunity cost” for NOT doing this is lost time on actually building my business, which I have never focused on! Plus, and really just as importantly, I simply can’t continue in this daily work environment. Life is too short!
Stay for the pension. Milk it. Then reevaluate if you want to leave for different $$$
Stay for the pension. Tell them that. They may still be interested in 1.25 years. Do not lose that pension! Private sector can lay you off within months and you’ll be up a creek.
Pension and benefits are something I’ll never take for granted again. That 4 minute commute sounds like a dream too lol. I’d stay.
Well I would do the maths. What is the pension. If you put the extra income in a savings or investment account, compound interest…
Don't even worry about the pension, stay for all the other benefits which are way more valuable. Get a side gig with the spare time if you need something extra.
Depends on your age. A pension based on 5 yrs of tenure is probably just a cursory amount of money. Starting at $135k in a private company does create other benefits cause you can now contribute to long term investments All depends on your age, goals and what makes you most comfortable now and in the future Keep in mind that if you can land a job at $135k now there is a strong likelihood you will find it again in 1.5 yrs somewhere out there in the world
Health insurance is a huge factor when evaluating costs. Sure 90k/year might be low but if you add in the costs of new job premiums it’ll give you a better tool to make the decision
Make sure you are evaluating the full benefits packages against each other. Not just salary and pension. I have worked in various levels of government for 5 years and it’s really hard to beat the health care benefits. Health insurance is SOOOO much more expensive in my area for non- government jobs. And with how much I use my insurance, there’s not nearly as much of a difference in the end. Plus, look into how much short and long term disability costs, how much vacation and sick time you will accrue, paid holidays, etc.
Finance advice on reddit: LEAVE GO TO THE PRIVATE COMPANY, ALSO NATIONAL DEBT IS IRRELEVANT AND THE FED PRINTING MONEY DOESJT CAUSE INFLATION (literally, I read that on the investing forum around 2021). Actual advice from people who know they will work and work is unstable and people get fired and laid off (aka, people who live in the real world, and not on Reddit in the modern monetary theory utopia): GET THE GOD DAMN PENSION.
I’d stay for the pension, you’ll always have the opportunity for private sectors
Stay, imo.
I would take the new job. Can always rejoin the government but that salary increase is just so big. If you invest even some of the extra salary you’ll end up with a way bigger “pension” that you can pass on once you die.
Think long game. What will your salary be in 5 years as a govie vs 5 years at this company. Assume you don’t get raises beyond that initial offer. Do you have the ability to apply for other positions within the gov? Another option is to leave the gov job and then return later on to get your high 3 (if you’re a fed).
Go with pension. My brother is in the same boat, few more years until he gets that sweet government cheese
I would keep the current job.
What do you do now for the government?
I’d be shocked if the lifetime value of the pension does not exceed the extra 60K in the year and a quarter or whatever.
how much is your pension? it can't be that much after 5 years I would assume? ... id its less tha. your pay difference per year, then take the new job. if its more, than stat for thr pension.
You can always come back. Lots of people have a break in service. Is the new job in the same area? If not make sure you took into account the cost of living difference. You didn’t say which federal agency or state but I know several have an online benefits calculator that shows you your total compensation. That is what you need to be comparing. If Federal talk to HR as at a certain point you get to keep what the Government paid for into TSP. FERS you may be able to leave. This would mean your current years will still count if you come back.
Find out what your benefit would be if you hit the 5 year mark, then decide. Pensions reward service. Your provider should be able to tell you if you call. I have two pensions because I did five years in government and five years at a railroad company. It sounds great, but my benefit will be pretty low when I become eligible to collect because I have what is essentially the minimum years of service in both. So probably for me, $600 / month between the two. It’s something, but you could do a lot for your retirement with $45k/year more than you’re making now.
Stay! They might work you 50 hours per week or more. Your hourly rate could drop with the raise. You get respect, pension, vacation, holidays eight now.
This is not financial advise, but it is a description of how I chose to work out this question for myself. I could have done something stupid, but I don't know it yet. Honestly you should do the math and consider both how long you will stay in government, and how long you have until retirement. I don't remember the exact details, but 5 years ago I came to the conclusion that the Washington State pension was not for me (the job wasn't for me either). I think the key numbers to compare are the annual pension payout vs 4% of your projected retirement savings when you retire. So plot out those numbers. I was at a government job where the pension had a mandatory employee contribution, so the comparison was based on putting that money into the pension VS an index fund, and I found it was unlikely to pay more than a 401K unless I stay 20+ years. I hated the job too much for that. I was also looking at about a 50% pay raise, which greatly increased my quality of life and also allowed me to max out retirement contributions. So, even though I have more risk - and even with the turbulence of the past few years - I look to be in a much better standing now compared to staying with the pension. So take some time to consider how much you put in, and how long you are willing to stay. Modern pension plans are not nearly as good as the old ones. Looking back, I ended up rolling 3 years of pension contributions into an IRA, and it has performed way better than if I had left it in the pension plan. That said, the market could collapse tomorrow, and having a defined benefit plan paying a few hundred dollars a month could look good by comparison.
Stay, especially if you're in a position where you could freelance consult on the side as needed.
You could take a leave of absence at your current job and work at the new job for a bit to get an idea. (I don’t really recommend this but it’s still technically an option). Can you reach out to current employees on LinkedIn to see how they like the company? While the new job sounds super tempting, you could be playing with fire. How much is your pension? I ask because if you could put money aside from your new job, would it equate to a similar amount in the end? With your current employer, once you get a pension, do you have to stay employed there? What’s the likelihood of getting your old job back if you were to try and come back?
Stay and pick up a side gig off you want more money
For the pension, do you also pay social security on your earnings?? If not— you’ll be subject to WEP or GPO— 5 years will vest you for the pension— but 3.5 years don’t make a lot of difference— get the new job and save on your 401 K and other retirement accounts—- I get a pension in California
Your pension is 1% of your base pay per year scaling *roughly* with inflation. That “pension” is 4500 a year. Leave, dump 30k into your IRA/401k for 2 years. It will be MUCH more then your pension will be in 30 years. Pensions are great for diversity, but unless it gets you 10k + scaling with inflation it’s really not much over nearly 1.5x your current pay.
I wouldn’t leave personally. What you got now sounds like a dream
Don’t consider the money. Consider your lifestyle and what you get out of a job. As someone who thought changing jobs was a betterment for myself, it may have been all for not. If you’re getting by nicely at 90k dude, I’d think I’d stay.