Is a pension all it’s cracked up to be?

[Anonymous]

So you make $290K combined, have no mortgage payment and kids are in aftercare (i.e. not full time daycare)? You should have plenty of money so I would focus on stability and work-life balance.

[Anonymous]

Anonymous wrote:Do the numbers. Biggest advantage of government jobs is the stability. These 350k jobs are not stable and also not that easy to find so you might be looking at longer pauses in your income that might eat away that higher salary. Just simulated the numbers for the next 15 years, make some assumptions about possible job losses and see where you land.

A pension is only worth about $30k/year with that much income you can recreate a low risk guaranteed income stream from treasury bills etc.

The bigger issue as an older millenial (40s?) is you can make $350k but get laid of at 50 or so — how easy is it to return, or would you be able to retire at 50?

[Anonymous]

You casually mention retiree health care being part of the pension. That is actually huge. What is the cost of it and possible cost changes?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Do the numbers. Biggest advantage of government jobs is the stability. These 350k jobs are not stable and also not that easy to find so you might be looking at longer pauses in your income that might eat away that higher salary. Just simulated the numbers for the next 15 years, make some assumptions about possible job losses and see where you land.

A pension is only worth about $30k/year with that much income you can recreate a low risk guaranteed income stream from treasury bills etc.

The bigger issue as an older millenial (40s?) is you can make $350k but get laid of at 50 or so — how easy is it to return, or would you be able to retire at 50?

This is often shared on here but how common is it really? There seem to be many employed baby boomers at corporations. I don’t doubt that ageism exists but also can’t imagine it’s common enough to work for the government because of it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Do the numbers. Biggest advantage of government jobs is the stability. These 350k jobs are not stable and also not that easy to find so you might be looking at longer pauses in your income that might eat away that higher salary. Just simulated the numbers for the next 15 years, make some assumptions about possible job losses and see where you land.

A pension is only worth about $30k/year with that much income you can recreate a low risk guaranteed income stream from treasury bills etc.

The bigger issue as an older millenial (40s?) is you can make $350k but get laid of at 50 or so — how easy is it to return, or would you be able to retire at 50?

This is often shared on here but how common is it really? There seem to be many employed baby boomers at corporations. I don’t doubt that ageism exists but also can’t imagine it’s common enough to work for the government because of it.

It happened to all of my relatives.

I mean if you are leadership level you are safer, so you have to advance enough to be safe.

Where do you work with plenty of boomers

[Anonymous]

Pension by a long shot. Especially since you mentioned that healthcare is part of your pension package, you have good work-life balance, and there is volatility in your field in the private sector. And house is already almost paid off.

It is a no brainer, OP.

[Anonymous]

Can you get health care after only five years? bc that sounds amazing

it seems it makes sense to stick around for the five year pension at least

[Anonymous]

I don't get this. I am a fed making a measly 100k toward a pension that will pay 33% when I retire. Whoop de doo. If I could make an extra 160k per year now, how is that money not worth WAY more by retirement?!

[Anonymous]

Anonymous wrote:Pension by a long shot. Especially since you mentioned that healthcare is part of your pension package, you have good work-life balance, and there is volatility in your field in the private sector. And house is already almost paid off.

It is a no brainer, OP.

NP. If I have read the thread correctly, then OP currently doesn't have a pension, but her org is considering reinstating itinerary 18 months. No guarantee.

Separately, I think ageism is more prevalent in some size of companies more than others. I have a relative who worked for a corp in the Fortune 500 in the top 20. If you weren't moving up, then eventually you were moved out unless you were on the union side of workers, which really were only the leftover early days workers.

Also, ageism is probably industry dependent.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You can calculate exactly how much they are worth, eg by finding out how much an spia annuity of the same amount would cost.

DP
Using the 4% rule, if OP gets $3k/mo in today's money the annuity would be $1M, give or take. If she takes the job and invests just $50k/yr in a taxable investment fund in the S&P assuming a conservative 6% gain for the next 20 years, she would be much better off.

OP - take the higher pay unless the job security is very low.

....I feel like I just helped my 5th grader with a word problem.

6% is actually pretty aggressive. The problem is that the stock market goes up and down. So there’s a concept called path dependency — basically that it matters when you earn the money more than what the average returns are. If you have a few down years when you first retire, you’ll need to pull from the principal. And then you’ll have less principal to earn interest, so you’ll need to do better than 6% to get that 12K per year. This is the problem that the people that retired in 2007 had — they lost a ton of their principal in the 2008-09 crash. Plus once you are retired you need to be pretty conservative about investments to avoid this problem. So while 6% average returns across a period of time may be realistic generally, it may not really work that well as a basis for retirement expectations.

You're right it doesn't work post retirement and there is some balancing that need to happen 10 years before retirement. I used 6% as conservative because it is. The S&P typically averages 8-9% annually over the long term. OP has a lot of time and this is in addition to her 401k, so the calculation is reasonable.

[Anonymous]

My pension pays 70% of my final income with COLAs some years but those who started a few years after me will only get about half of that, so if I were in that position I would max out my 529 and Roth as much as you can. I would have gotten more of a percentage if I had stayed a few more years but it's enough and I don't have a mortgage.

[Anonymous]

PP, I meant 457, not 529.

[Anonymous]

Anonymous wrote:I don't get this. I am a fed making a measly 100k toward a pension that will pay 33% when I retire. Whoop de doo. If I could make an extra 160k per year now, how is that money not worth WAY more by retirement?!

OP should have been working at the highly lucrative jobs a decade ago, before she was on the cusp of being axed at the next downturn. Why didn’t you pursue it earlier Op? Why did you enter a boring lower paying job — can you hack it in cut throat long hour corporate job? They make you earn that extra money is my understanding?

[Anonymous]

My husband is career military so can have a pension starting at 43. Worth it's weight in gold.

[Anonymous]

Anonymous wrote:OP here. Thanks all this has been really helpful.

1. I max current retirement offerings, mostly because we’d get eaten alive in taxes otherwise.
2. House is already paid off.
3. I also contribute to a 457b. Would continue to have the option of contributing to that account if enrolled in pension as well.
4. Current role is interesting and good work life balance.
5. 18 months from now the pension plan will have reopened or it’s never going to happen.
6. Retiree healthcare is part of pension plan.
7. External roles pay $500k a year including bonuses, but field is volatile. I can expect to be on the job move every 3-5 years. I’d have 10-15 years of runway before being considered old, which would definitely impact earning potential. No job security.
8. I could moonlight in current role. Maybe an extra $30k a year.

Based on this, I would definitely wait for pension to open and sign up. If it doesn't open, then you might think of leaving.