Quantifying Value of Federal Benefits for Private Sector

[Anonymous]

How would you factor in the benefits of a FERS Pension, reduced healthcare, 401k match, life insurance etc. when requesting a proposed salary in the private sector?
What is the quantifiable value?
Lets say for a GS14 step 1 employee, attorney going to the private sector.

[Anonymous]

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.

[Anonymous]

What are the terms of your private sector offer?

[Anonymous]

Well the 401k match and healthcare and well most everything else is pretty easy to compare. If your current company matches 5% and you make $100K and next firm matches 3% and you make $150K, it's straight forward math.

[Anonymous]

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

[Anonymous]

Op, an intelligent question that elevates this site ~ hope you get some good answers

[Anonymous]

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

Same and same question as the poster. At this point, if I keep working in the gov't until retirement, I'll be entitled to a pension worth $60k/year. Not huge, and is about 15 percent of my current GS-15 salary (which is expected to rise until the max), but how do I compare that to future salary in the private sector?

And what about health benefits?

[Anonymous]

Anonymous wrote:

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

Same and same question as the poster. At this point, if I keep working in the gov't until retirement, I'll be entitled to a pension worth $60k/year. Not huge, and is about 15 percent of my current GS-15 salary (which is expected to rise until the max), but how do I compare that to future salary in the private sector?

And what about health benefits?

Sorry, meant 45 percent.

[Anonymous]

There are actual numbers stating the government's share of your benefits on your earnings and leave statement.

[Anonymous]

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.

[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.

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

[Anonymous]

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.

[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 - I think PP was assuming 162k. my estimator says i (15/10) will get 5640/month or 67680/year (w/o survivor benefit) when i turn 62 w/ 36 years of service.

[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.

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).

[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.

One way to estimate it is to look at what it would cost for an annuity-- either calculated off the TSP site or a private company. Or you could use the 4% rule (that you will draw down 4%, adjusted for inflation, each year-- that is designed to cover a 30 year withdrawal in good times or bad),.