How do you calculate the value of your federal pension?

[Anonymous]

How do you see this in terms of your salary? Worth it to earn $20k less? $50k?

[Anonymous]

Pension is priceless. Doesn’t seem much when you are young but when you retire, there is nothing better than money that comes every month

[Anonymous]

Anonymous wrote:How do you see this in terms of your salary? Worth it to earn $20k less? $50k?

Are you asking whether it's worth it to forgo a pension for a job that pays $50k more? Depends on how long you've already been in federal service. If you've been in 19 years that's a very different number than if you've been in 5 years. As with any job, it's much easier to walk away earlier in your career.

However, the pension doesn't go away if you leave. So if you've been in 19 years and then decide to go to a non-federal job that pays $50k more, you are still going to get that 19-year pension when you hit the relevant age.

[Anonymous]

It's worth less than people think. I was making a touch over $200k with the government. I ran the numbers and to stay and retire, it would only make an additional $25k per year (over the 55k-ish that I am already going to make). You can earn that much- easily- with 500k investment in the stock market. I was offered a private sector position at 650k per year. Total no brainer, I took the job. People told me I was crazy to miss the gains on my pension but that math isn't mathing.

[Anonymous]

Anonymous wrote:It's worth less than people think. I was making a touch over $200k with the government. I ran the numbers and to stay and retire, it would only make an additional $25k per year (over the 55k-ish that I am already going to make). You can earn that much- easily- with 500k investment in the stock market. I was offered a private sector position at 650k per year. Total no brainer, I took the job. People told me I was crazy to miss the gains on my pension but that math isn't mathing.

I guess you are humble bragging. If your private job offers 650k (which I don't even believe), this question isn't really applicable to you.

[Anonymous]

This can be thought of as an investment that depends on how long it is until you retire. An investment in equities doubles roughly every decade, so $1K saved 20 years before you retire is very roughly $4K just before you retire. To draw out over a typical retirement you take out perhaps 10% a year to get to zero. This means that $5K saved 20 years before retirement becomes $20K at retirement and this gives you $2K annually in pension. A government pension is about 1% per year of your final salary. Each year you earn a pension that’s probably in the range of $1K-$2K annually. You’ll contribute a few $K to earn that, though, which wipes out most of the benefit. So if you can earn more, take a job without a pension and save the difference.

[Anonymous]

Anonymous wrote:This can be thought of as an investment that depends on how long it is until you retire. An investment in equities doubles roughly every decade, so $1K saved 20 years before you retire is very roughly $4K just before you retire. To draw out over a typical retirement you take out perhaps 10% a year to get to zero. This means that $5K saved 20 years before retirement becomes $20K at retirement and this gives you $2K annually in pension. A government pension is about 1% per year of your final salary. Each year you earn a pension that’s probably in the range of $1K-$2K annually. You’ll contribute a few $K to earn that, though, which wipes out most of the benefit. So if you can earn more, take a job without a pension and save the difference.

You're right - but people really struggle to save the difference. It can be reassuring to know the money will be there in retirement because you weren't able to blow it on a bigger house.

[Anonymous]

Anonymous wrote:It's worth less than people think. I was making a touch over $200k with the government. I ran the numbers and to stay and retire, it would only make an additional $25k per year (over the 55k-ish that I am already going to make). You can earn that much- easily- with 500k investment in the stock market. I was offered a private sector position at 650k per year. Total no brainer, I took the job. People told me I was crazy to miss the gains on my pension but that math isn't mathing.

OP basically asked the right question. To save up $500k of after tax money with a guaranteed return (so in treasuries or similar to match the low risk pension) is about $20k per year of additional income

[Anonymous]

Anonymous wrote:

Anonymous wrote:It's worth less than people think. I was making a touch over $200k with the government. I ran the numbers and to stay and retire, it would only make an additional $25k per year (over the 55k-ish that I am already going to make). You can earn that much- easily- with 500k investment in the stock market. I was offered a private sector position at 650k per year. Total no brainer, I took the job. People told me I was crazy to miss the gains on my pension but that math isn't mathing.

OP basically asked the right question. To save up $500k of after tax money with a guaranteed return (so in treasuries or similar to match the low risk pension) is about $20k per year of additional income

For those investing over the long term - let’s say 25 years - you would put the savings in something higher growth than treasuries. This takes only about $10K in annual investment to yield $500K at retirement, at which point you can move it to a lower risk, reliable return position and generate retirement income.

[Anonymous]

Anonymous wrote:How do you see this in terms of your salary? Worth it to earn $20k less? $50k?

What is your pension formula for determining the payout at retirement? What percentage of your salary at retirement will you receive for life?

[Anonymous]

As many have said, it depends on your situation, OP. Can you add whether you work for the federal govt now or are just considering it? Years of service. Age. What age you hope to retire. Expected salary on the outside and the risk of layoffs in your 40/50s in your field. Whether you have a spouse who is federal so that your family already has fed benefits.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It's worth less than people think. I was making a touch over $200k with the government. I ran the numbers and to stay and retire, it would only make an additional $25k per year (over the 55k-ish that I am already going to make). You can earn that much- easily- with 500k investment in the stock market. I was offered a private sector position at 650k per year. Total no brainer, I took the job. People told me I was crazy to miss the gains on my pension but that math isn't mathing.

I guess you are humble bragging. If your private job offers 650k (which I don't even believe), this question isn't really applicable to you.

It depends when they left. The lowest SES level pay is 183k and the highest is 250k as of this year. When I was in the government, my SES was in charge of more than 500 people. I think that could be translated into the private sector for a hefty amount.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's worth less than people think. I was making a touch over $200k with the government. I ran the numbers and to stay and retire, it would only make an additional $25k per year (over the 55k-ish that I am already going to make). You can earn that much- easily- with 500k investment in the stock market. I was offered a private sector position at 650k per year. Total no brainer, I took the job. People told me I was crazy to miss the gains on my pension but that math isn't mathing.

OP basically asked the right question. To save up $500k of after tax money with a guaranteed return (so in treasuries or similar to match the low risk pension) is about $20k per year of additional income

For those investing over the long term - let’s say 25 years - you would put the savings in something higher growth than treasuries. This takes only about $10K in annual investment to yield $500K at retirement, at which point you can move it to a lower risk, reliable return position and generate retirement income.

That’s not an equivalent comparison— ask people who retired during GFC or had to withdraw money to pay for college. A pension is risk free, and there is a premium for that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's worth less than people think. I was making a touch over $200k with the government. I ran the numbers and to stay and retire, it would only make an additional $25k per year (over the 55k-ish that I am already going to make). You can earn that much- easily- with 500k investment in the stock market. I was offered a private sector position at 650k per year. Total no brainer, I took the job. People told me I was crazy to miss the gains on my pension but that math isn't mathing.

I guess you are humble bragging. If your private job offers 650k (which I don't even believe), this question isn't really applicable to you.

It depends when they left. The lowest SES level pay is 183k and the highest is 250k as of this year. When I was in the government, my SES was in charge of more than 500 people. I think that could be translated into the private sector for a hefty amount.

I'm the one who wrote about my new job at $650k. It's absolutely true. But my point in saying that is that people are so attached to the concept of a pension that they cant see any circumstances under which they are okay losing it. You can literally make back the value of the pension many times over but psychologically it's not palatable for many feds.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's worth less than people think. I was making a touch over $200k with the government. I ran the numbers and to stay and retire, it would only make an additional $25k per year (over the 55k-ish that I am already going to make). You can earn that much- easily- with 500k investment in the stock market. I was offered a private sector position at 650k per year. Total no brainer, I took the job. People told me I was crazy to miss the gains on my pension but that math isn't mathing.

I guess you are humble bragging. If your private job offers 650k (which I don't even believe), this question isn't really applicable to you.

It depends when they left. The lowest SES level pay is 183k and the highest is 250k as of this year. When I was in the government, my SES was in charge of more than 500 people. I think that could be translated into the private sector for a hefty amount.

I'm the one who wrote about my new job at $650k. It's absolutely true. But my point in saying that is that people are so attached to the concept of a pension that they cant see any circumstances under which they are okay losing it. You can literally make back the value of the pension many times over but psychologically it's not palatable for many feds.

what kind of job you got and in what field?