Leave Fed? Help me with the math?
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Anonymous
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GS15
Lawyer $175k now 50 years old 15 years in gov Ballpark pension if stay: 175k x 30 (years) x 1.1% = ~$58k Ballpark pension if leave: 175k x 15 (years) x 1%= ~$26k (I realize salary will grow so Est pension isn’t 100% correct) Given the above, what is the min salary you would accept from private sector to leave? |
Anonymous
| It only makes sense if you can make in 5 years what you make in 15 because you will be out of work at 55 in most private scenarios |
Anonymous
| Depends. What are your upside options if you leave? Do you want quality of life or shiny things? There's no wrong answer, but it's hard to help without more details. |
Anonymous
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you should have left 5 years ago.
Most lawyers with your experience in F300 public company are making double what you make with annual bonuses, and stock awards. If it’s a growing company, that stock has upside over the next 10 years, upwards of a million dollars. That covers your measly differential on pension. Can you get hired at 50 in your specialty? Ask for 250 with 25% bonus to start, ask about the stock awards or LTIPs |
Anonymous
| You are not eligible for pension yet. |
Anonymous
| Don’t forget retirement health insurance. You must be an employed fed at the time you retire to be eligible for the federal retiree health insurance. Unless of course your get your insurance through a spouse or plan to work until age 65. |
Anonymous
Well she didn’t leave. I’m guessing mommy track and now kids are old enough she can lean in. So you say doubling it would be worth it? Will she run a risk of ageism ending her career? |
Anonymous
No, you can take it with you if you stay until 55 |
Anonymous
| How much do you save with gov retirement health insurance? What’s the monetary value? |
Anonymous
OP here. Yes this. Is there a “safe” way to significantly increase earnings before retirement? |
Anonymous
Don't forget the effects of inflation, OP. If you stay with the feds another 12 years (you could actually retire at 62 with 27 years of service), the pension would be ~$52k, adjusted for inflation. Assume 4% inflation per year for the next 15 years, and that would be abut $83k in 2034 dollars. If you left now and took deferred retirement, you could get $26k/year when you hit 62—but that, too, is in 2034 dollars. Retire at 65, and those numbers become about $104k in 2027 dollars if you stay a fed...and still $26k if you take deferred retirement. Hang on until you're 68, and those numbers become $129k (and $26k) in 2030 dollars. Of course, all that assumes that federal salaries will keep up with inflation, and they don't (especially the cap). So the actual inflation-adjusted numbers will be lower if you stay. But I assume you get the idea: over the next 12-18 years, inflation will make a much bigger difference than your numbers suggest. Also, don't forget that if you do leave, you can cash out your FERS contributions and and invest it. You've been a fed long enough that your contributions are still only 0.8%, so even over 15 years I don't think cashing out will get you enough money that you can do better than the pension by investing it, but it may at least be worth running the numbers. |
Anonymous
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I just realized that it may make more sense to think about the numbers in terms of 2022 dollars.
Again, for simplicity assuming 4% annual inflation and that fed salaries and inflation keep pace: Retiring at 62 as a fed: ~$52,000 in 2022 dollars Retiring at 65 as a fed: ~$57,500 in 2022 dollars Retiring at 68 as a fed: ~$63,500 in 2022 dollars Deferred retirement at 62: $16,400 in 2022 dollars |
Anonymous
Right so that’s about $30k more pension, which represents about $750k in capital assuming 4% withdrawal rate to save that over next 15 years she would need probably about $40k/year assuming investing in low risk/slow growth assets. So basically any job paying $30k-$50k more salary simply replaces the pensions — assuming she even can make it 15 years in that private sector job (depends on how ageist your industry is). To be worthwhile You would like for a boost of $75k or maybe $100k to a) make it after tax dollars you are saving and b) boost savings to hedge against being laid off prior to 62 or so. |
Anonymous
| I would not leave in your situation. The stability is worth too much. |
Anonymous
| What private sector industries are least ageist, most stable, most lucrative? |