Quantifying Value of Federal Benefits for Private Sector

[Anonymous]

Anonymous wrote:But a government guaranteed pension of $60k a year until you die is worth exponentially more than the estimated value of what you'll likely actually pull out. Let's say actuarial tables estimate you'll only live 20 years after retirement, so you're talking about $1.2million of pension payments (let's ignore inflation to keep it simple). But you MAY live 40 more years. Which is $2.4million. If you don't have a pension, you have to put aside NOW so much more money than $2.4million if you want to guarantee yourself $60k a year until the unknown date that you die. You have to protect against inflation, market swings, etc. So the fed pension is worth a LOT more than the actuarial value of it.

Well actually, you'd put aside less than $2.4M now. A lot less, both because it would grow at 6-7% for the next 20 years before you retire AND because it'll also grow for the 20 years before you reach that next 20 in retirement.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:But a government guaranteed pension of $60k a year until you die is worth exponentially more than the estimated value of what you'll likely actually pull out. Let's say actuarial tables estimate you'll only live 20 years after retirement, so you're talking about $1.2million of pension payments (let's ignore inflation to keep it simple). But you MAY live 40 more years. Which is $2.4million. If you don't have a pension, you have to put aside NOW so much more money than $2.4million if you want to guarantee yourself $60k a year until the unknown date that you die. You have to protect against inflation, market swings, etc. So the fed pension is worth a LOT more than the actuarial value of it.

This is what I've intuitively thought. I would love to see the hard numbers in some sort of online calculator or something.

So, you're assuming that you will make approximately $190K for your top three years and that's how you'll end up with $60K/annually for life? It's unclear your age, but that's a good amount of COL increases and step increases to end there.

I'm not OP, sorry for the confusion. I was assuming high-3 was 165,000, but now that I look at the salary table again, I see that it tops out at $161,900. I'm only six steps from there. I ran it again and I think I'm doing the calculation correct (1.1% x 161,900 x 32).

I thought it was the base salary, and not the adjusted COL salary? So, for instance a 14 step 1 in DMV is $115K, but the base may only be $80K.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:But a government guaranteed pension of $60k a year until you die is worth exponentially more than the estimated value of what you'll likely actually pull out. Let's say actuarial tables estimate you'll only live 20 years after retirement, so you're talking about $1.2million of pension payments (let's ignore inflation to keep it simple). But you MAY live 40 more years. Which is $2.4million. If you don't have a pension, you have to put aside NOW so much more money than $2.4million if you want to guarantee yourself $60k a year until the unknown date that you die. You have to protect against inflation, market swings, etc. So the fed pension is worth a LOT more than the actuarial value of it.

This is what I've intuitively thought. I would love to see the hard numbers in some sort of online calculator or something.

So, you're assuming that you will make approximately $190K for your top three years and that's how you'll end up with $60K/annually for life? It's unclear your age, but that's a good amount of COL increases and step increases to end there.

I'm not OP, sorry for the confusion. I was assuming high-3 was 165,000, but now that I look at the salary table again, I see that it tops out at $161,900. I'm only six steps from there. I ran it again and I think I'm doing the calculation correct (1.1% x 161,900 x 32).

I thought it was the base salary, and not the adjusted COL salary? So, for instance a 14 step 1 in DMV is $115K, but the base may only be $80K.

I'm not 100% sure, but are you confusing base salary with basic salary?:

Your basic pay is the basic salary you earn for your position. It includes shift rates and locality pay; but does not include COLA, overtime or bonuses.

http://www.plan-your-federal-retirement.com/fers-pension

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:But a government guaranteed pension of $60k a year until you die is worth exponentially more than the estimated value of what you'll likely actually pull out. Let's say actuarial tables estimate you'll only live 20 years after retirement, so you're talking about $1.2million of pension payments (let's ignore inflation to keep it simple). But you MAY live 40 more years. Which is $2.4million. If you don't have a pension, you have to put aside NOW so much more money than $2.4million if you want to guarantee yourself $60k a year until the unknown date that you die. You have to protect against inflation, market swings, etc. So the fed pension is worth a LOT more than the actuarial value of it.

This is what I've intuitively thought. I would love to see the hard numbers in some sort of online calculator or something.

So, you're assuming that you will make approximately $190K for your top three years and that's how you'll end up with $60K/annually for life? It's unclear your age, but that's a good amount of COL increases and step increases to end there.

I'm not OP, sorry for the confusion. I was assuming high-3 was 165,000, but now that I look at the salary table again, I see that it tops out at $161,900. I'm only six steps from there. I ran it again and I think I'm doing the calculation correct (1.1% x 161,900 x 32).

I thought it was the base salary, and not the adjusted COL salary? So, for instance a 14 step 1 in DMV is $115K, but the base may only be $80K.

I'm not 100% sure, but are you confusing base salary with basic salary?:

Your basic pay is the basic salary you earn for your position. It includes shift rates and locality pay; but does not include COLA, overtime or bonuses.

http://www.plan-your-federal-retirement.com/fers-pension

Sorry, yes. So, then it would include the DMV 27% locality pay? I though that I saw on OPM it does not, but I could be very wrong. I still have 28 years left until retirement!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:But a government guaranteed pension of $60k a year until you die is worth exponentially more than the estimated value of what you'll likely actually pull out. Let's say actuarial tables estimate you'll only live 20 years after retirement, so you're talking about $1.2million of pension payments (let's ignore inflation to keep it simple). But you MAY live 40 more years. Which is $2.4million. If you don't have a pension, you have to put aside NOW so much more money than $2.4million if you want to guarantee yourself $60k a year until the unknown date that you die. You have to protect against inflation, market swings, etc. So the fed pension is worth a LOT more than the actuarial value of it.

This is what I've intuitively thought. I would love to see the hard numbers in some sort of online calculator or something.

So, you're assuming that you will make approximately $190K for your top three years and that's how you'll end up with $60K/annually for life? It's unclear your age, but that's a good amount of COL increases and step increases to end there.

I'm not OP, sorry for the confusion. I was assuming high-3 was 165,000, but now that I look at the salary table again, I see that it tops out at $161,900. I'm only six steps from there. I ran it again and I think I'm doing the calculation correct (1.1% x 161,900 x 32).

I thought it was the base salary, and not the adjusted COL salary? So, for instance a 14 step 1 in DMV is $115K, but the base may only be $80K.

I'm not 100% sure, but are you confusing base salary with basic salary?:

Your basic pay is the basic salary you earn for your position. It includes shift rates and locality pay; but does not include COLA, overtime or bonuses.

http://www.plan-your-federal-retirement.com/fers-pension

Sorry, yes. So, then it would include the DMV 27% locality pay? I though that I saw on OPM it does not, but I could be very wrong. I still have 28 years left until retirement!

Yes. https://www.opm.gov/retirement-services/calculators/fegli-calculator/basic-pay/

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:But a government guaranteed pension of $60k a year until you die is worth exponentially more than the estimated value of what you'll likely actually pull out. Let's say actuarial tables estimate you'll only live 20 years after retirement, so you're talking about $1.2million of pension payments (let's ignore inflation to keep it simple). But you MAY live 40 more years. Which is $2.4million. If you don't have a pension, you have to put aside NOW so much more money than $2.4million if you want to guarantee yourself $60k a year until the unknown date that you die. You have to protect against inflation, market swings, etc. So the fed pension is worth a LOT more than the actuarial value of it.

This is what I've intuitively thought. I would love to see the hard numbers in some sort of online calculator or something.

So, you're assuming that you will make approximately $190K for your top three years and that's how you'll end up with $60K/annually for life? It's unclear your age, but that's a good amount of COL increases and step increases to end there.

I'm not OP, sorry for the confusion. I was assuming high-3 was 165,000, but now that I look at the salary table again, I see that it tops out at $161,900. I'm only six steps from there. I ran it again and I think I'm doing the calculation correct (1.1% x 161,900 x 32).

I thought it was the base salary, and not the adjusted COL salary? So, for instance a 14 step 1 in DMV is $115K, but the base may only be $80K.

I'm not 100% sure, but are you confusing base salary with basic salary?:

Your basic pay is the basic salary you earn for your position. It includes shift rates and locality pay; but does not include COLA, overtime or bonuses.

http://www.plan-your-federal-retirement.com/fers-pension

Sorry, yes. So, then it would include the DMV 27% locality pay? I though that I saw on OPM it does not, but I could be very wrong. I still have 28 years left until retirement!

Then do the math properly. 30 years until retirement is a long long time. I used to work in government and thought similarly, now, ten years out, I am set to clear about $600K a year. That's basically 3x the value of a single year in government, and of course, putting away $200K a year towards retirement means that in less than 10 years you can easily amass a small fortune, plus interest for 30+ years. To say you could enter retirement with $10M is pretty reasonable

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:But a government guaranteed pension of $60k a year until you die is worth exponentially more than the estimated value of what you'll likely actually pull out. Let's say actuarial tables estimate you'll only live 20 years after retirement, so you're talking about $1.2million of pension payments (let's ignore inflation to keep it simple). But you MAY live 40 more years. Which is $2.4million. If you don't have a pension, you have to put aside NOW so much more money than $2.4million if you want to guarantee yourself $60k a year until the unknown date that you die. You have to protect against inflation, market swings, etc. So the fed pension is worth a LOT more than the actuarial value of it.

This is what I've intuitively thought. I would love to see the hard numbers in some sort of online calculator or something.

So, you're assuming that you will make approximately $190K for your top three years and that's how you'll end up with $60K/annually for life? It's unclear your age, but that's a good amount of COL increases and step increases to end there.

I'm not OP, sorry for the confusion. I was assuming high-3 was 165,000, but now that I look at the salary table again, I see that it tops out at $161,900. I'm only six steps from there. I ran it again and I think I'm doing the calculation correct (1.1% x 161,900 x 32).

I thought it was the base salary, and not the adjusted COL salary? So, for instance a 14 step 1 in DMV is $115K, but the base may only be $80K.

I'm not 100% sure, but are you confusing base salary with basic salary?:

Your basic pay is the basic salary you earn for your position. It includes shift rates and locality pay; but does not include COLA, overtime or bonuses.

http://www.plan-your-federal-retirement.com/fers-pension

Sorry, yes. So, then it would include the DMV 27% locality pay? I though that I saw on OPM it does not, but I could be very wrong. I still have 28 years left until retirement!

Then do the math properly. 30 years until retirement is a long long time. I used to work in government and thought similarly, now, ten years out, I am set to clear about $600K a year. That's basically 3x the value of a single year in government, and of course, putting away $200K a year towards retirement means that in less than 10 years you can easily amass a small fortune, plus interest for 30+ years. To say you could enter retirement with $10M is pretty reasonable

Cool story. What do you do?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:But a government guaranteed pension of $60k a year until you die is worth exponentially more than the estimated value of what you'll likely actually pull out. Let's say actuarial tables estimate you'll only live 20 years after retirement, so you're talking about $1.2million of pension payments (let's ignore inflation to keep it simple). But you MAY live 40 more years. Which is $2.4million. If you don't have a pension, you have to put aside NOW so much more money than $2.4million if you want to guarantee yourself $60k a year until the unknown date that you die. You have to protect against inflation, market swings, etc. So the fed pension is worth a LOT more than the actuarial value of it.

This is what I've intuitively thought. I would love to see the hard numbers in some sort of online calculator or something.

So, you're assuming that you will make approximately $190K for your top three years and that's how you'll end up with $60K/annually for life? It's unclear your age, but that's a good amount of COL increases and step increases to end there.

I'm not OP, sorry for the confusion. I was assuming high-3 was 165,000, but now that I look at the salary table again, I see that it tops out at $161,900. I'm only six steps from there. I ran it again and I think I'm doing the calculation correct (1.1% x 161,900 x 32).

I thought it was the base salary, and not the adjusted COL salary? So, for instance a 14 step 1 in DMV is $115K, but the base may only be $80K.

I'm not 100% sure, but are you confusing base salary with basic salary?:

Your basic pay is the basic salary you earn for your position. It includes shift rates and locality pay; but does not include COLA, overtime or bonuses.

http://www.plan-your-federal-retirement.com/fers-pension

Sorry, yes. So, then it would include the DMV 27% locality pay? I though that I saw on OPM it does not, but I could be very wrong. I still have 28 years left until retirement!

Then do the math properly. 30 years until retirement is a long long time. I used to work in government and thought similarly, now, ten years out, I am set to clear about $600K a year. That's basically 3x the value of a single year in government, and of course, putting away $200K a year towards retirement means that in less than 10 years you can easily amass a small fortune, plus interest for 30+ years. To say you could enter retirement with $10M is pretty reasonable

Thanks. I'm a new poster btw, not op.

[Anonymous]

fine, but not likely for others - not a good example to use

[Anonymous]

How does job security factor into your analysis? It's obviously great in the federal sector and very bad at a private law firm (in other words, the knock on the door and the hey, got a few minutes, talk and resulting layoff can happen anytime). This played a big role in my decision--a jump from a 15 to a firm was only worth it for double the pay.

[Anonymous]

Anonymous wrote:I actually think pension is the most difficult aspect to quantify.

That's easy--there's a formula.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:But a government guaranteed pension of $60k a year until you die is worth exponentially more than the estimated value of what you'll likely actually pull out. Let's say actuarial tables estimate you'll only live 20 years after retirement, so you're talking about $1.2million of pension payments (let's ignore inflation to keep it simple). But you MAY live 40 more years. Which is $2.4million. If you don't have a pension, you have to put aside NOW so much more money than $2.4million if you want to guarantee yourself $60k a year until the unknown date that you die. You have to protect against inflation, market swings, etc. So the fed pension is worth a LOT more than the actuarial value of it.

This is what I've intuitively thought. I would love to see the hard numbers in some sort of online calculator or something.

So, you're assuming that you will make approximately $190K for your top three years and that's how you'll end up with $60K/annually for life? It's unclear your age, but that's a good amount of COL increases and step increases to end there.

Np. No idea about these people's details, but 180K for high threes, with 30 years of service puts one at slightly under 60K a year.

[Anonymous]

Anonymous wrote:There is no way to compare them without knowing the benefits offered by the private option. Some private sector companies don't require you to pay 25% of your health care, others require you to pay more. Some offer 2-1 match on 401k up to the max.

When you're given an offer, ask about the benefits. Then, compare apples to apples. It's not like private sector provides salary only with no benefits, so no need to quantify them by themselves.

Exactly. I work for a company that matches my 401k dollar to dollar and pays 100% of my healthcare for my entire family, no deductible either. Not to mention telework, ehich saves me thousands a year and they pay for my internet and cell phone.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:But a government guaranteed pension of $60k a year until you die is worth exponentially more than the estimated value of what you'll likely actually pull out. Let's say actuarial tables estimate you'll only live 20 years after retirement, so you're talking about $1.2million of pension payments (let's ignore inflation to keep it simple). But you MAY live 40 more years. Which is $2.4million. If you don't have a pension, you have to put aside NOW so much more money than $2.4million if you want to guarantee yourself $60k a year until the unknown date that you die. You have to protect against inflation, market swings, etc. So the fed pension is worth a LOT more than the actuarial value of it.

This is what I've intuitively thought. I would love to see the hard numbers in some sort of online calculator or something.

So, you're assuming that you will make approximately $190K for your top three years and that's how you'll end up with $60K/annually for life? It's unclear your age, but that's a good amount of COL increases and step increases to end there.

I'm not OP, sorry for the confusion. I was assuming high-3 was 165,000, but now that I look at the salary table again, I see that it tops out at $161,900. I'm only six steps from there. I ran it again and I think I'm doing the calculation correct (1.1% x 161,900 x 32).

Absent qsi, six steps is wayyyyyyy in the future.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:But a government guaranteed pension of $60k a year until you die is worth exponentially more than the estimated value of what you'll likely actually pull out. Let's say actuarial tables estimate you'll only live 20 years after retirement, so you're talking about $1.2million of pension payments (let's ignore inflation to keep it simple). But you MAY live 40 more years. Which is $2.4million. If you don't have a pension, you have to put aside NOW so much more money than $2.4million if you want to guarantee yourself $60k a year until the unknown date that you die. You have to protect against inflation, market swings, etc. So the fed pension is worth a LOT more than the actuarial value of it.

This is what I've intuitively thought. I would love to see the hard numbers in some sort of online calculator or something.

So, you're assuming that you will make approximately $190K for your top three years and that's how you'll end up with $60K/annually for life? It's unclear your age, but that's a good amount of COL increases and step increases to end there.

I'm not OP, sorry for the confusion. I was assuming high-3 was 165,000, but now that I look at the salary table again, I see that it tops out at $161,900. I'm only six steps from there. I ran it again and I think I'm doing the calculation correct (1.1% x 161,900 x 32).

Absent qsi, six steps is wayyyyyyy in the future.

We get step increases every year.