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

[Anonymous]

Anonymous wrote:

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

It happened to lots of people I know. Many were never able to get anything comparable to the job they lost.

The safest is actually one level below what’s considered top level leadership, because that’s where you most need institutional knowledge. Everything above is a revolving door of the current trends and CEo’s whims.

[Anonymous]

Anonymous wrote: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?

I just switched to a HDHP. Premiums are fully paid by employer. Family deductible is $3200, just about everything is covered 100% past that point. For anything that does have a copay, $20.

My plan would stay the same upon retirement or there is a PPO option.

[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.

This is where I’m leaning, because the private sector isn’t $5M a year but would be significantly more work.

[Anonymous]

Yes, it is. Why do you think businesses wanted to get rid of it. The wealth divide has gotten far worse ever since the country killed pensions in lieu of 401k.

[Anonymous]

While you can always invest that additional money, there is always the potential for "lifestyle creep" as well as spending time and energy worried about that job's volatility and the next job. Yes, gov't jobs can be a different type of grind (boring, dealing with incompetence, etc) but there is that stability you don't have to spend your time on,w hich is not as bad on your heart.
Go with the pension, unless you have a plan to save like75% of what you're earning and go until you can't go no more.
Or just wait another 2 years to consider the private sector job and then do a vector check.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I worked in a pension department and most people were getting $1600-$3600/month depending on years of service, marital status and salary and age etc. most of them falling in the $22-2600/mo range. Add social security and you won’t starve especially if you have your house paid off.

Pensions are guaranteed by pbgc.gov but there was a time when pensions were failing and a bunch of companies did away with them

Public sector pensions are not guaranteed by PBGC. If the salary difference is that big, you can save more for retirement and convert some of it to an annuity when you retire if you want a guaranteed stream of income. That would put you ahead of your public sector pension, assuming it does actually open up to you, which is far from a given.

When you say public sector here do you mean state gov, military, post office, teachers, police/fire or federal gov? Or churches (do they pay pension?)? Not sure what Op means either. Are public sector pensions funded by tax dollars?

[Anonymous]

I work for a nonprofit and I get paid 300K/year. I've been with this nonprofit for 16 years and if I leave today, I can collect about 200K in the pension lump sump payment. Pension is not what it cracks up to be.

[Anonymous]

Anonymous wrote:What I found is that my friends in the public sector made twice what I made. But they also spent twice what I made. Now that we’re in our late 50s I am on track to retire at 58 and they are on track to work for the rest of their lives.

I think it makes sense to go private if you have the ability to put money aside, invest, etc so that you have a good retirement.

Yeah, my friends they went on vacations and drove amazing cars, bought the bigger house

But here we are.

Don’t even get me started about my friends that are divorcing. That’s a complete mess.

Do you mean your friends who went private spent twice what you did in public sector?

[Anonymous]

Anonymous wrote:I work for a nonprofit and I get paid 300K/year. I've been with this nonprofit for 16 years and if I leave today, I can collect about 200K in the pension lump sump payment. Pension is not what it cracks up to be.

Industry tradefroup?

[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?!

It would be worth more if you know you'll keep the job for all the years to retirement, but that doesn't always happen. If you got laid off and couldn't find another job, the 100K government job might look better.

[Anonymous]

Pension means the employer takes on all the risk - meaning the risk the market does not do well, and the risk you live longer than expected.

Our office includes two senior employees on a pension plan. Everyone else is on a 401k to which other em oyer contributes 8% of salary. Although the pension employees' salaries are about $10k lower than that of our director, their full personnel cost is about $30k higher because they are on the pension plan and the director is on the 401k. The amount budgeted for pension benefits is based on an actuarial calculation.

[Anonymous]

My employer also has a pension, plus provides an optional 401k plan as well (but no match). I have done the math and with the match, the pension works out better (up to a point of course...id much rather be at a place making 400k with no pension or 401k match...however I am sure that comes with other pitfalls)

The only issue in my case is that I work at a place where it is net pay (ie our income is not taxable), so the issue is that what I contribute and what the employer contributes (18% i believe) is based on net pay instead of gross pay (therefore lower contribution). However, given the generous "match", I think it would be hard to find a place that could do better retirement benefits wise. Now is the actual net-pay great, that is debatable (in my view...no given how long it takes to move up levels, you are lucky if you are at 200k net at 50years old).

As other have said (and as something I am admittedly guilty of), there is certainly lifestyle creep as you make more. My solution recently (and if your situation allows) is to use both a pension and 401k (or another alternative). Ie contribute max of what is allowed to your pension, and also contribute a bit (or max out if possible, which in my case is not possible lol, ie 22k ish) the 401k as well. That way, hopefully, you manage to avoid some of the pitfalls of making more yet spending more.

[Anonymous]

Anonymous wrote:

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?!

It would be worth more if you know you'll keep the job for all the years to retirement, but that doesn't always happen. If you got laid off and couldn't find another job, the 100K government job might look better.

I think everyone would love to retire early.

Assuming OP is 35 its a good deal if they can make it to 50 which seems like (and doesnt even consider the likely higher final salaries and growth).

35-62 $100,000 $2700000
35-50 $260000 $3900000

She can do a lot with an extra $1.3M

[Anonymous]

Anonymous wrote:Yes, it is. Why do you think businesses wanted to get rid of it. The wealth divide has gotten far worse ever since the country killed pensions in lieu of 401k.

Just another thing to blame on the boomers. They set themselves up with pensions, got scared they'd lose them, so pulled them back for all those in their footsteps. Protecting themselves at all costs. Despicable.

[Anonymous]

OP, after thinking, I think in your case it make perfect sense to move if you do get an offer of around 350k+bonus. That is significantly more than what you make now, and, moreover, no pension annually makes up for that difference. Sure the job may not be as stable, but at almost 2x the comp (if not more, if bonuses are substantial) that is a risk worth taking (as long as you put aside more $$ overtime). Worst case scenario if laid off, you can go back government afterwards.