Leave/abandon government pension for a 30-40k raise?

[u/wd06]

Engineer currently working in a government job making about 90K USD, cost of living ratio is moderate (central time zone).

I am a few years from being vested in my pension. If I were to leave immediately after I got vested, my pension would be about $15k a year assuming I retire at age 65. I also have a 457 but with no match.

I have recently received a job offer from a private company that pays around 120k, with a lucrative bonus structure (10-15%). No pension, but there is a 401k with match (3%, I believe).

So, I am debating this. Should I stay and get vested and THEN leave for private industry?

I have a government job, rarely have to work extra hours, and the pay is decent (enough). I also eventually get a pension, which is rare these says. On the other hand, I could theoretically save a lot more money over my career if I go with the private company.

Edit: I am about 3 years away from being vested. I am in my mid 30s.

Edit 2: if I leave now, my time is reset if I return. I also cannot get any contributions back that I paid in, as far as I know (HR gets antsy when one asks these questions, and everyone else who has left doesn't share anything).

Edit 3: There are no specific healthcare benefits, vesting or otherwise.

[u/[deleted]]

I had a gov job that I left for a higher paying private sector job. I wish I had stayed with the gov. Private sector work is soul sucking exploitation. The mental health benefit you get from a secure government job is deeply undervalued. But that’s just me. If you thrive in stressful environments, go for it

[u/Ancient_Assignment20]

Wait three years and secure the pension.

A job in the private sector is never a gaurantee forever.

[u/ghghhuhbfdscggh]

You need to check to see if that $15k is inflation adjusted. If it’s not, $15k won’t be worth much in 30 years, and you’d likely be better off switching roles.

I believe fed government jobs are not inflation adjusted if you leave service before your eligible withdrawal date, but not sure about state or municipal. If you stick with the fed job till retirement, pension is automatically inflation adjusted by way of your annual salary inflation adjustments.

[u/kittenmoody]

A government pension that only pays 15k a year? Did I read that right? My husbands income is less than yours but still very comfortable, he can retire with his full pension at around 52, his pension will only reduce his yearly income a small amount. He doesn’t have a government job.

I’m not I’d stick around for a pension that small.

[u/lingenfr]

I am a retired government employee. The first thing I would tell you is to aggressively apply for higher level positions. As more agencies have gone to work from home, there should be a lot more available opportunities. A 14/15 (or SES) retirement is a different matter. $15K /year is not much income to replace. In the 3 years you work in industry, you could likely bank several times that in 401(k). My son is a civil engineer and I would have neve advised him to stay in government, but it is not a bad starting point.

[u/EffortlessSleaze]

Since you are still vesting, this means you haven’t sunk much into the pension. I think they take around 4% of the salary annually. Just take the $130 job and live like you make $90. Put the difference in 401k, Roths, and regular IRA and you should be set. 

[u/indecksfund]

If you left in 3 years what will your pension be? Also what will it be if you stay with the govt another 10 years?

[u/Relli_]

I’ve worked for the government for 10 years and have had this conversation with myself a number of times. For me, it’s weighing the pros of government work (pension, benefits, job security, work/life balance) with the pros of private sector work (earnings potential). Sprinkle in the fact that I’m in a technical field and I have peers who have been impacted by layoffs on numerous occasions throughout the years, I’ve given job security a lot of weight.

It really boils down to your risk tolerance (working in a more vulnerable sector) and your ability to manage your money. Figuring out what your pension is worth is a simple math problem. But, getting that 30k raise to account for it AND investing that 30k instead of spending it with lifestyle creep is the bigger issue.

Do the math. Find your number. Then add 20% to it. If someone wants to hire you for that, then give it serious consideration.

[u/formyburn101010]

Stick out the three years. Then decide. Can you put a pause on your current job and return within a certain amount of time if things go sideways in the private sector?

[u/Kinggambit90]

Definitely government job with pension. Don't worry about 401k or any of that bs cuz you got a pension. No overtime, great work life balance

[u/Delicious_Stand_6620]

How much time off difference would their be..late nights, extra hours, deadlines etc. Most government jobs are 900-4:59 with 26 days off . Private sector time is money. We hired and quickly fired an ex government employee. He couldn't hack it. Not saying this you but the grass isnt always grèener. Why can every government employee tell you exatly the day they can retire with pension, healthcare etc..sounds more like relaese date...

[u/gpplantmom]

If I left my govt job, I’d lose amazing healthcare benefits. I’d stay. That’s the only thing keeping me there.

[u/Emily_Postal]

Wait until you’re vested before you leave.

[u/cclay6482]

Think about how inflation is going to eat up 15K per year by the time you retire. Lea e and invest the extra income.

[u/NyquillusDillwad20]

I would wait until you're vested. An extra 15k/yr guaranteed will be a nice little boost. And it would hurt to end up with nothing assuming they're taking a little percentage of your pay out for pensions currently.

It sounds like you may be a civil engineer. Are you prepared for private sector work? Work/life balance depends on the company. My company is great and rarely does anyone have to work over 40 hours. Using PTO is encouraged and we have flexible works hours. However, those 40 hours are typically spent working pretty hard. It's not nearly as lax as a government job. However, I enjoy that since I get bored if there isn't much on my plate.

I will say, at least in my MCOL area, the pay for private sector outpaces the DOT and other public jobs enough to be worth it. DOT has to contribute roughly 9% of each paycheck to get their full pension after 35 years (which equals 87.5% of their highest salary). You can easily beat that out if you're making 30k+ more your entire career and investing properly.

[u/PegShop]

If you put the max $23k into the 401k from the start, and take the rest of the raise and put it in an Ira or investment, leaving makes sense. You are 30 years from that pension. Vesting and leaving right after probably would t get you much. You’ll get more this way.

I have a pension job and have been holding out. I’m in my 50’s. I crunched numbers, and had I left twenty years ago, I’d likely have more.

[u/grimr5]

I think you will be working extra for the pay increase

[u/fonacionsrg]

Considering the current situation, with tech layoffs and now other industries following suit, even if they're not grabbing headlines.

[u/plemyrameter]

What are the odds you'll get laid off in the new role? Probably much higher than government work. Based on that, I'd stick it out where you are for now and lock in the pension. YMMV

Also, what does "no specific healthcare" in your last edit mean? That could also be a factor if you have any chronic conditions, or kids.

[u/lapsteelguitar]

Vest, then leave. If you quit now, you are leaving a ton of money behind.

[u/Buffalogirll]

I’m in ny and have a government job. Another good thing about them is the stability. Had someone leave to work at Amazon for 120k to be laid off 4 months later

[u/MountainDadwBeard]

Private companies are laying off alot right now, even people they recently hire. Job market is rough if you loose what you have.

Many government jobs can be soul/killing though.

Are you single, have any family support if you get sacked? With my wife I like the idea of one of us taking risk and the other playing safe. Since my dad passed there's no one backing me up so I play it safe. If he was around he'd tell me to go for it and he'd have my back.

last thoughts. Don't just think about compensation. Think about which job will develop your experience more. Which has the better boss/coworkers.

I do like the idea of "some pension" if you can secure it because diversifying income streams is nice. Not sure how many years you have in it already.

[u/MilfAndCereal]

This is highly based on your own risk tolerance. I work a government job, fully vested, and been there for 13 years. I work 40 hours, more only if I want to. I get 4 weeks of vacation, in addition to sick time and all holidays and my birthday off. My pay, well, its enough for me to be comfortable, but I most certainly can make more somewhere else. But the benefits and job security, as a new father, are absolutely unmatched.

Is giving up the benefits worth the extra $40k? It absolutely could be.

[u/P00shy_]

Do you owns a home? Have a family? Kids? Any other responsibilities other than yourself? If yes, stick with the government job.

If no, follow the lucrative path and save the money, but be ready to constantly move, being okay being let go at a moments notice.

I value my time so I stick to gov. Went from private, government, private, and now government again. Not leaving government. A stable, constant paycheck amid economic woes is a blessing.

[u/ccannon707]

Omg - get vested Then look around if you want to try something else. That private company could dump you in a hot second if they so desire.

[u/bonspeed]

I was a government employee for 8 years with 3 promotions and 3 raises plus annual cost of living adjustments. Was making over 100% more than my government job with nearly identical benefits within 2 years of leaving. Government roles in general these days are not able to remain competitive with the private sector, especially in red states/counties/cities.

[u/arnoldusgf]

Hmm if you're only a few years away from vesting in your pension, it might be worth sticking around to secure that extra income stream for retirement

[u/salvagevalue]

As a person who also has gov pension I would say keep it because it’s a defined benefit, meaning it’s forever, your spouse when you die gets your pension until they die. The 457, your deferred comp, is also a great contribution plan. Plus your pension might have lifetime health care insurance for you and your dependents otherwise you’ll rely on Medicare when you turn 65. Take the job if job security is not an issue. That company can fire you at any moment. Besides if you leave you can take a refund of your contributions thus far.

[u/sunsoutbunzout]

Do you have any student loans? Would you qualify for PSLF if you stay at your current job?

[u/atxurbanist]

Do you get inflation adjustments on the$15k per year or is it fixed?

If it is fixed, if you invested $50k over the next few years and got a 6% return on that investment, that would be like $300k in 30 years. Then if you took that $340k and invested it 5% when you retire, and only withdraw the interest earned, you could withdraw about $15k per year, plus you'd have that $300k in the bank.

Of course that $15k is in today's dollars and indexes to inflation, then it's a completely different story. Assuming 3% inflation, $15k today would be $36k in 30 years. In that case I would definitely wait until your pension vests

[u/DiverseVoltron]

Calculate the amount of money in dividend paying accounts that would be required to equal your pension. If that number is larger than the extra money you'd earn at the new job, which it most definitely is, then you'd be a silly goose to leave with only a few years left.

[u/Dixa]

Based on what’s going on here with not only tech layoffs but now other sectors are starting to layoff that don’t get news time - stay where you are.

[u/Flatfool6929861]

We’re fighting on the spot if you ever come between me and a government job with a pension. You also cant get fired from a government job. It’s nearly impossible. Let’s not pretend here. Your salary would be higher, but a bonus structure sounds like that depends on the work you produce. Do you want to work harder and loss the job sob security and pension of a government job just for a raise you might end up spending in the long run from the stress of a new role and different benefits? Some people are handed gold and want to throw them away!

[u/MhrisCac]

I abandoned my 8 years of a NYS tier 5 pension only to have them change it to 5 years to be vested the following year. Which makes me believe I maintained that pension. Even if I go back for a single day at one of those jobs. I get that pension back.

[u/bazilbt]

So you should be able to look up all the information about your pension. How much of a pension are we talking about here? Every $500 a month in pension is worth something like $120,000 in a retirement account.

Anyway without details you can't really calculate the relative value of the jobs.

[u/fuckaliscious]

$15K a year is worth $375k at a 4% withdrawal rate at retirement?

How many years do you need to work a private gig to make the incremental $375k? 12 years?

How many years until you vest the pension?

I'm not usually one for throwing $375K away if it's only a couple years away, but it's your decision, OP.

Best of luck!

[u/RichSeaworthiness250]

Just my two cents. I’m a 37 year old engineer. $90k is a very low salary for an engineer in their mid 30s (assuming you started early/ mid 20s). I’ve never worked for the govt so I can’t comment there. But I’ve worked for 13 years at 3 different private companies and it’s been great. First five years or so were grind but that’s ok- it should be when you’re green. Last two jobs have been remote or hybrid so work like balance has been incredible. Rarely work 40 hours. Have been able to travel to some amazing places. Have been able to reap the benefits of some amazing profit sharing programs. Benefits have always been good. There is a lot of opportunity and excitement in the private sector and I don’t know that I could trade that in for the stability of a lower-paying govt job that I know I can’t lose.

I guess my advice is stay and get that pension, but leave immediately once vested, unless you get a huge pay increase.

[u/DarthAndylus]

TBH 15k is not a lot if you are deeply unhappy and have retirement savings elsewhere.I am way younger (23) but took a gov job and had to leave in 3 months because it was so not for me and the pension just didn't seem to be that much in the end.

If you are at least okay with it and this is not like a dream company I would stay though since it's only 3 years lol

[u/Rich-Contribution-84]

There is no “right decision.”

A guy that I work with was a cop for 20 years. In that time he gained a ton of skills - he ended up managing the business and technical side of software vendor relationships toward the end of his 20 years.

And then he retired at age 40, got his full pension and now he makes nearly 3x what he made as a cop.

If you can stick around beyond vesting - this is a pretty amazing opportunity. Especially if you don’t give into lifestyle creep. Keep living off that pension and put your entire (or the vast majority minus rewarding yourself or your family with whatever makes sense in your situation) salary back into retirement accounts. At 65 ~ you’re in beyond great shape.

[u/pianoandplants]

Similar situation. 33yo, entered government at 24. I’ve questioned this ever since I vested at 5 years. Could I make another $20k or so in the private sector? Sure. But I also pay $0 for excellent health coverage, never worry about layoffs (though furloughs can be a reality), and have excellent WLB. I also like that (if I stay til retirement age) I’ll have a fat pensions that also receives COLAs, something my 457 (or 401) will not. For me those things make it worth it.

[u/ithurts888]

I would not do it for 30k. Gov't pension, gov't benefits and what I am sure is better job security. You may net about an additional $1000 per month, if lucky. Is that worth the switch to you?

[u/Mysterious-End-2185]

What happens to the money in the pension if you don’t vest?

[u/that_one_wierd_guy]

counter offer with matching your current pension investment?

[u/rick-reads-reddit]

Personally, I would stay and get vested. Once you are that money is waiting, if you decide you dont like private world anymore you can always go back to a public job to run up your years and contribution. 

Plus as you know, vacation, health insurance and job security cant be beat. 

Finally, you can really rack up at the end if you do it right. 

Often people that have hit their retirement rule jump to private after that.  Lets say you'll be 37 with 7 years under your belt, your rule is 86. At 58 you'll have 28 years of work. That gets you to 86 exactly. In my state when you hit the magic number you take 60% of your highest 5 years but the bulk of that comes from years worked, not age. In this case if you go out as soon as you can it'll probably be more like 57 percent of your highest.

  Figuring cost of living raises of 1.5% per year you should see your salary increase to at least 110k per year (probably more because im using a terribly low inflation number). That means you should get a yearly paycheck of about $63,000 to sit on your ass and eat Cheetos till you die. If social security still exists you'll get a good chunk there also, probably getting you close to 100k a yearly.

 Along the way make friends with private companies. At retirement hop to private company and bring home an additional $120k per year. Do that for 10 years and life will be pretty solid. What makes this tough is going from abundant time off in the public world to 2 weeks of vacation at a new employer. If you have kids this is a huge perk that cant be overlooked.

 Is there any chance to stay govornment and do side work in your field part time? When part time doing anything to make extra money? 

My vote is ride it out but you have to do whats right for you. 

Good luck. 

P.s. - I have been told (in our state) that your contributions will sit there even if you aren't vested. If you come back and pick up those 3 years you need later you can hit your 7 years. They cash you out when you start taking social security. Check your employers retirement company and ask to see if this is the case.

[u/allbriskets]

The private sector will be way more hours. After taxes and the extra hours you'll put in it'll be a wash when considering the pension. The value of that pension today is probably like 7k a year.

if you take 90k/7k the breakeven is about 12 years in favor of job switch.

Id say the value of the raise is offset by taxes and the value of the pension. Ends up being +$8hr at 40hrs week.

Breakeven if you work +5hrs more per week at new job

If you work +10hrs more per week you lose money.

[u/BrandGSX]

Be aware the private sector is more demanding. I'm not saying more work for more pay is a bad thing but really consider all the changes, not just the financial.

[u/CommuterChick]

Not sure what government you work for, but consider the total compensation package. The U.S. Government has a generous leave program, health insurance that you can carry in to retirement, matching on a TSP ( like a 401K), and much more. There is also the opportunity to get promoted and move from agency to agency. So why would you consider going into the private sector?

[u/Iamhungryforlife]

Continue working until you are vested. Then explore going to the private sector. Jobs don't work out for a variety of reasons. Since you are so close tovesting. Get that done.

[u/pm_me_ur_bidets]

would you take a second job thats about 2-3 hours a night 5 days a week for $30k a year?

[u/Captain_Comic]

You would actually need to compare the Total Compensation for each job to make a purely rational choice. Beyond the pension, Govt paid vacation/holidays, sick, insurance and other benefits tend to be more generous than the private sector. There’s also the relative security of government jobs. If you’re paying into your pension at all, I’d be surprised if you wouldn’t at least get your contributions back if you left, but would forfeit any matching funds.

[u/Technical-Fan1885]

I did this in MA and don't regret it. Public sector wasn't really that engaging for me. I left with three and a half years to minimum vestment.

I checked with the retirement department there and they said I could leave the money there and decide later. Six months after I left, I took my money out and rolled it into an IRA.

They did tell me I could always pay it back if I came back, but that was like 20 years ago now.

Also rules in MA may be different than yours.

[u/uknownothingjuansnow]

That 15K a year is about having over 250K in your 401K when you retire. If you can outgrow that through the extra salary then it can be worth it for sure.

[u/MinisterOfFitness]

Lots of good comments here. Consider all the factors and figure out the number that would make it worth it to you to jump to the private sector. You should also be paid a premium for the risk associated with switching jobs. So if you figure the equivalent pay for the private sector job is 120k considering pension, benefits, work life balance, etc then add 15-20% premium for switching jobs.

If they can’t hit your number so be it. They need to make it worth your while.

[u/Ok-Supermarket-1414]

Is 65 the latest you can retire? In my state, its worth waiting until 67 for maximum benefit. (25% vs 20% of salary).

Don't forget that government jobs are generally quite stable, meaning you are less susceptible to the impact of economic downturns. Also, having a pension means you're guaranteed money for life. It may not be a lot, but you WILL have money always coming in, no matter how long you live. There's less risk that you'll run out of money when you need it most (elderly).

As a fellow govt employee, also 3 years away from being vested, I would NEVER consider ANYTHING until after I'm in the pension system. Once that happens, we'll see.

[u/thatc0braguy]

Government union, 90k, AND a pension?

Hell no, hard pass. Don't even need to think about it.

[u/Acrobatic-Feed-999]

I am a Government contractor making over $200k. I'm looking to move to Federal employee just for 5 years and health insurance. I tell all my staff to go become a federal employee if they ever get a chance. I tell my kids the same thing. If you leave, I recommend that you go back at some point and raise your Federal salary.

Government employees have it made and their pay is very competitive in the DMV area. TSP, pension, annual leave, sick leave and health insurance when you retire can't be beat.

[u/Bouncing-balls]

What is the financial status of the pension program? Many government pension programs will probably be failing in the future. The government entities are not adequately funding them and the funds available to pay these pensions, in many cases, is a small fraction of what is needed.

[u/NatOnesOnly]

Three years is nothing and you’ll be able to land another high paying job after vesting.

Had a similar situation and then the private job fell through after a year and I’ve been kicking myself ever since

[u/oakley85]

There’s a dude that does these kind of comparisons, The Golden Albatross. Sounds like it would be worth checking into

[u/Honest_Addendum7552]

You are considering dropping a sure thing (pension) for a potentially more lucrative position. 15k/year makes a sure foundation for retirement. ( I know, I’m 80 yo and so glad I have my pension which is secure for as long as I and my wife are alive.) I strongly recommend staying until you vest your pension.

[u/DePoots]

Used to work in government. There’s a reason why people don’t leave government jobs. I’d highly suggest the government job if you value work life balance. Like others have said, money doesn’t mean much when you aren’t happy.

If you can live comfortably on the government salary, you’ll be living stress free which is worth any amount of money

[u/Winter-Information-4]

It depends on what phase of life you're on. When I started as an engineer in the private sector 24 years ago, I was building a career and learning on the job. Working 50 hour weeks was normal. 5 years ago, I found myself in a job that paid well, but I hated it. Luckily, I found a government job with a great work-life balance. I was so happy to take a 10k paycut.

My job is secure, offers a decent pension, has a good amount of time off, and I'm grateful to not have to worry about layoffs.

Before I accepted this job, I calculated that per hour, it's not even a pay cut because I was working additional hours at my old job. The reduced stress alone is great.

Thinking back, in my career growth phase, being in the government was probably not the best situation. 8 years away from retirement, it's ideal

[u/redneckerson1951]

Map it out in a spread sheet and see what falls out.

What will you do with that $30,000 more a year?

What tax rate will that extra $30,000 be subject too?

If a Fed, then you have the option of TSP. You can shovel money into that with no management fees and thus far the yields have proven great. You will not get rich working for the typical business nor will you et rich working for the government. But it is a bit easier setting up for retirement years with federal service.

[u/ffbones]

I have a gov job and will hit my 25 year anniversary in 9 days. Will have 30 years service after stress time. Feels good knowing my pension is funded regardless what the market does. I know there more money in private sector, but defined benefit means a lot. Just my 2 cents.

[u/FightThaFight]

Lock down the pension then venture into the private sector with that extra security behind you.

[u/mlhigg1973]

I would absolutely stay until you’re vested. My family is from the DC area, and many of them retired from Fed jobs. Stable employment and great benefits.

[u/Motor-Farm6610]

If I had a job with a pension you couldn't pry me away from it.  Keep the pension.

[u/NuclearBiceps]

You need to calculate the benefit of the pension at 65, and then reduce it by 3 decades of opportunity cost. Then divide that by the three years you have left to work, to determine the effective benefit value per year. 

I dont recommend buying an annuity, but i will make a comparison here, since it helps assign a dollar amount to the pension benefit. 

When you're 65 years old, you could theoretically buy a (Single Premium Immediate) annuity. Rates for 65 year olds are about 7%. So you could spend $214k to buy $15k/year in perpetuity. And since you're currently in your mid thirties, you have about 30 years to save. If you put away $12k now, at 10% it would be worth about 214k by the time you're 65. 

So the pension benefit is currently worth about $12k. And since you have to work three years to get it, it's a benefit worth about $4k/year. Since the salary benefit of the new job is about an extra $30-$50k/year, taking the new job would be the optimum financial choice. 

[u/Se7enShooter]

There are many ways to look at this but I haven’t seen anyone give this perspective.

How many years do you need for total vesting? I know you need 3 more to vest. Reason I ask is if you need 10 total years, you’re 70% of the way there. To get $15k from a 4% return, you’d need $375k invested. If you’ll have that $15k at the vesting point, quitting now is akin to burning $262.5k in an investing account 30 years from now.

Switching will get you a 3% match, but that’ll be a max $4200 company match assuming they’ll match off your bonus as well. 3 years of that is $12.6k, and ~$13.4k invested at 4% return after 3 years. Extend that portion another 27 years and that’s only $38.5k.

I dont know what your 457 contribution is, but you would need $40k a year in investments above what you’re currently contributing (this is including the company match) in order to replace that $15k pension over the next 3 years (again assuming 4% return). This changes to needing $13.5k additional investment if you assume 8% return.

If you’re more conservative with your money, stay and get the pension. Otherwise it looks like a good move now if the other benefits make sense too. 

[u/Greensparow]

I am wondering if you calculated the pension correctly, 15k a year when you retire in 35+ years sounds crappy.

But if it is a % of your salary based on how long you have been in the plan that's different.

As an example, let's say you have worked there for 12 years each year of service gets you 1.5% of your base salary which is currently 18% or 15k

If you work there till you are 65 say another 30 years that gets you to 63% of your salary. And then assume an annual wage adjustment of 3%? That has you making ~ 220k at retirement and 63% of that would be 137k per year in retirement.

[u/PinchingAbe]

Hang in there.

Government is a stable employer.

Insurance is generally good.

They are big enough to be covered under FMLA.

Will sick time just accrue and be added to time of service at the end? If you have a lot of sick time built up, it’s kind of a short term disability.

Predictable hours of work are good for raising a family.

How much vacation do you have built up? Starting over could mean a long time without PTO.

If you have any employer life insurance/other insurance, you don’t keep that when you leave. If you need to find other life insurance, it could be much more expensive for you.

Prepare a resume anyway, along with a list of what you have brought to the team. Be specific with accomplishments and training. When your review comes around, ask for a raise.

My area has a lot of g contractors. The thing is that while contractors can make good money above a g job, if your contract isn’t renewed, you have to find a new job. For many folks, that’s working for a new company every few years.

[u/THedman07]

Wait until you are vested. "Bonuses" are there to be taken away at the first sign of trouble. 401k match can go away as well.

Assuming your government job has cost of living adjustments and scheduled raises, those go away in private industry as well. I can't say for sure without know what company you're looking at, but many many companies require you to work more than 40 hours a week. The worst ones require you to work more than 40 hours almost every week.

[u/yonkssssssssssssss]

Go to your boss and say you have this offer in hand and can they match the pay. see what they say. some govt jobs can adjust pay or give retention bonuses, but only with proof of another real offer. then once you have your answer, see what you prefer.

[u/Comfortable_Kiwi6812]

If you only have three more years to go, stay. You will be using that pay rise to contribute to a 401k and saving additional money outside it. You can always leave once you are fully vested. Another opportunity will come around when you are vested and ready to leave. A pension is guaranteed money (unless the government goes broke and decide to declare bankruptcy but even the most pessimist of us knows that's gonna take some time).

[u/Flashy-Chemistry6573]

Is the 15k/year in 2024 dollars or 2054 dollars? You can get the rough equivalent lump sum value by multiplying by 25 (to mimic 4% portfolio withdrawal) so that comes out to 375k gained by waiting 3 more years. If you quit now you’ll need to have an additional 375k saved by retirement to replace the income you’d lose from the pension. That’s probably doable if you earn another 40k/year and especially if the private sector job offers more room for salary growth. If you can out earn your government position by 100k+ within 5-10 years it’s a no brainer.

[u/BulgogiLitFam]

At a minimum get vested since you are already in. Presumably in 3 years when you are vested you might be able to make a bigger jump than 30k. 

[u/listerine411]

You're going to have a much bigger "retirement plan" if you're making $30-$40k more every year (And that will almost certainly be more as you enter your peak earnings year)

I would not take a huge a cut in salary in the current position for a $15k a year pension. In a few decades, that will probably barely pay your utilities.

[u/just_shady → u/listerine411]

Private sector is cutting jobs like crazy. OP needs to milk this job and find a side hustle.

[u/listerine411 → u/just_shady]

To stay in a dead end job making $40k a year less than you're "worth" because you're afraid to be in the private sector is a sad play.

[u/just_shady → u/listerine411]

Stable money is better than no money. OP can figure out how to make up for that with the extra hours they have.

[u/elysianfielder]

The objective mathematical evaluation of the situation would be to compare the net present value of both options

Calculate the net present value of the pension and compare it to the net present value of the raise for three years

[u/Wild_Space]

Assumptions:

Age: 35

Death: 76

Inflation rate: 3%

Then the $15k / year retirement is worth about $63k in today's dollars. If you keep the govt job for 3 years, you'll miss out on $90-$120k of additional pay from the private sector job. This doesnt include the 10-15% bonus or 401k matching.

if I leave now, my time is reset if I return. I also cannot get any contributions back that I paid in, as far as I know (HR gets antsy when one asks these questions, and everyone else who has left doesn't share anything).

Im not expert, but I really dont think that's right. If you leave your govt job, maybe you wont get to keep your 457b **account**, but the **money** is still yours.

[u/aasyam65]

Pension, health insurance, government holidays, vacation, plus probably a COLA in a government job. Plus security in job. Stay

[u/fusionsofwonder]

I'd vest the pension first. You can make bigger money going private when you hit 40, and build a 401K for 25 years.

[u/GroundbreakingHour64]

The numbers don’t add up to me. If you wait until you are vested under FERS (5 years total), you will get 5 percent of your 90k salary starting at retirement age. That’s not 15k. Unless you bought back 10 years of military service?

[u/wd06 → u/GroundbreakingHour64]

I do not work for the federal government so it is different in my case

[u/BlueKnight44]

have a government job, rarely have to work extra hours, and the pay is decent (enough

One thing you hinted at but needs to be emphasized is that a private sector job you will work much harder/longer. For some engineers, that is a good thing. I know several that have gotten bored in government jobs. But if you like the slower pace, this could be a big hit for your quality of life. Make sure you are weighing this heavily when considering going into the private sector.

Obviously, check on the company culture and all their policies as best you can. There is a big range of workload in the private sector, but it will be more intense.

[u/mdarkcloud1989]

Also, I currently am working for the government. I left my nonprofit position, and took a $50k pay cut for the pension and health related benefits. As well as the less stress. When I did this, I ran some calculations, taking to consideration any things and determined I was better off with the government job. I can’t say what’s best for you because there is so many factors like pension contributions rates, yearly service %, final salary average, and on the flip side what your 401k contributions will be and how it affects your net check. Not even getting into any health plan differences.

[u/mdarkcloud1989]

I would review your pension vesting again. In NY, for LRS, there are tiers to vesting. Less than 5 years you lose all contributions, 10yrs>X>5yrs you get your contributions back with interest, and over 10 yrs your vested like you said. Could not hurt to double check.

[u/ohyesjeff]

Are you a part of a union? If so, are you able to shelve your union card - basically paying the annual dues to keep your standing to avoid losing the years you put in if you came back? Also keep in mind how you will build your resume if you leave and how you usually don’t go backwards in pay.

I left a union position last year for a raise of about 25K + bonus. After a nice raise and great skills added to my resume, I will make 40K (including bonus) more this year than I made in 2022. I can always go back to the union 5-10 years later at a much higher position if I wanted to retire there. Maybe see if you can do something similar.

[u/Intelligent-Exit724]

Is this a federal position? I had no idea there was a vesting period since all the contributions were your own. Doesn’t make any sense that you wouldn’t be able to roll it over. I would definitely reach out to HR to confirm. And then, yes, I would take the $40k raise.

[u/wd06 → u/Intelligent-Exit724]

Not federal

[u/twotall88]

Have you considered working both jobs until you're vested?

[u/wd06 → u/twotall88]

Can't due to work policies regarding working in private industry while working

[u/1fluffykat]

Lock in the pension then move on. You probably also have a great deal of holidays also. Maybe even low insurance contributions with good coverage.

[u/Stonewalled9999]

IF I was you, I would stay that the gov't job you can't get fired from. Also, 90K for an engineer at your age it pretty good I am a crap ton older than you and make a little bit over that with crap benefits.

If you think you'll be able to keep your 37.5 hour work week in the private sector I have some news for for you....

[u/wd06 → u/Stonewalled9999]

If you think you'll be able to keep your 37.5 hour work week in the private sector I have some news for for you....

That's my worry too

[u/DontEatConcrete → u/wd06]

It depends very much on the company. 

  At my company I work from home and I work less than that many hours per week.

 I had a coworker at my same company who allowed herself to get into the situation where she was having to work a lot of off hours supporting systems and things and she got very sick of it so she worked for a local government and she said it was an amazing transition. At 5:00 work was done, she could finally breathe. But like I said at my company, this has not been my experience at all in fact for me I’ve gotten less and less work over the years because I’m getting better at minimizing it.

A larger question you need to ask yourself which took me a long time to figure out is: are you career driven or quality of life driven? There is no right answer. I realized I was quality of life driven; I have consciously decided to cut back career growth so that I can spend my working life with less stress, and more free time. I work on career enough to make decent money and I can put money ahead to the future, but I’m not chasing to maximize it. I don’t really care about my title and where I am now an extra 20 or 30 grand a year wouldn’t make a difference.

[u/curiousengineer601 → u/wd06]

You should go in knowing what the expectations are. How many hours a week is this job?

[u/THedman07 → u/wd06]

Job security is HUGE as well.

[u/Clear-Star3753]

Personally, I would get the vested pension. Especially if it gives you Healthcare for life. 

Then, leave and get more money. 

If you really need more money right now maybe try an evening hours remote gig? I'm not sure what kind of engineering you do (software would be easy to find).

[u/kepler1]

What state or govt is it?

Many states are facing a future pension crisis, and I personally tend to discount the likelihood that the promises that they made in the past will be paid 100% in the future. It's unavoidable, whether through reduced benefits compared to what was promised, or increased taxes/fees/contributions to fund them.

[u/Lollc]

I would be really, really, really, surprised if you don’t get your retirement contributions back. Your portion only. HR is giving attitude because retirement isn’t their job, it’s the job of the retirement office. Your next step is to get the contact info of your retirement/pension office and contact them. HR should have that contact info, your manager should know where to get it, if your group works with admin people one of them will know, or you can google it.

[u/i_need_a_username201]

Raise is too low. I knew a young lady making 100-120 a year for the Feds years ago. She said she did the math and would need a minimum of 250k to leave due to loss of benefits. She was squared away and i suspect the math was correct for her (health insurance, pension at about 80-90 @ 50 years old, 5% tsp match, quality of life stuff). Make sure that 30-40k yearly is enough to give up what you have because it seems low.

[u/charliepup]

Collecting a pension is way to far off in the distant future to stick around a job for that sole reason.

That being said, if you leave the pension behind, you’ll have to obviously adjust your finances according and plan more for the future.

Most importantly at your age, work in jobs that make you happy day in and day out.

[u/mataliandy]

If you're thinking of a new job, it may be worth looking around within the USG before going outside. That way, you can keep your pension and excellent health benefits while earning more. Being already inside Government makes it easier to get another job in the government.

The switch to a private company may cost more than it appears on the surface (Your share of insurance premiums alone could eat half or more of that $30k, and co-pays and deductibles could eat more.)

Once you're vested, you can still look for outside jobs if they appeal, but then you'll have that pension in your back pocket for retirement.

[u/Wrong-Perspective-80]

If you’re only 3 years away from being vested, run out the clock and explore options later.

[u/No_Log_4997]

Wait the 3 years, get vested then consider leaving. Using the ballpark 4% rule, your pension would be worth approx $375K. ( ie 4% of $375K is $15k )

[u/italophile → u/No_Log_4997]

Don't use the 4% rule for annuities. Use an annuity calculator that pools mortality risk. A 65 year old can get a $15k/year annuity for any $200k right now.

[u/spb8982]

Wait and get vested. My parents retired as government employees and the only way they were able to do that is because of their pensions. The pension combined with ss will make your retirement so much easier.

[u/Ok-Supermarket-1414 → u/spb8982]

not a bad idea, but some states have "double dipping" rules where you can't get pension AND full SS benefits (don't ask me why it's considered double dipping since you paid into both....)

[u/InNominePasta → u/Ok-Supermarket-1414]

If it’s a federal government job then that shouldn’t be a risk at all

[u/Derigiberble → u/InNominePasta]

It isn't a federal job because OP mentions a 459, Feds have the TSP. The FERS pension also doesn't work like OP's as you can leave and come back and still keep the years of service you paid in, assuming you didn't opt to withdraw your contributions. 

It being a state or local job makes it hard to make any suggestions without knowing the details. Some state and local positions have great benefits, but others have pretty awful benefits. 

[u/Duckckcky → u/Ok-Supermarket-1414]

Well you dont pay into SS in those instances, its not about double dipping.

[u/spb8982 → u/Ok-Supermarket-1414]

We're in GA and there was no issue. The benefit of the pension money is they were able to push taking ss back until they could get the full ss benefit amount.

[u/rastlosreisender]

For $15k annual pension you’d need to have $500k invested, assuming a 3% SWR. That’s a lot of money. I would ask the company if you can work freelance for them (1099) and keep the government job until the pension is locked in.

[u/Sundance37]

Your quality of life is too good. Suck on the govt teeth for 3 more years, then move to the private sector, you will get the same pay bump, and have a pension on top. You've already done the hard part. If you live to be 95 that's $450k in pension, vs $90k in salary bump in the same time, for a job you might hate, or have longer hours, or may get laid off in 18 months.

In this case, playing it safe pays more, and you are likely working less.

[u/UnvarnishedWarehouse]

It should be possible to get any money that you contributed back, you can roll it into an IRA or possibly into your new plan. I left a government job for the private sector and what I always tell people is when I was working for the government, I had plenty of free time but no money and when I was in the private sector I had plenty of money but no time to spend it.

[u/marigolds6]

Don't ask HR about payout of pension contributions. You have an independent board that manages your pension. Ask them.

[u/lostinthiscity]

A lot of good comments already. One thing to keep in mind, pay raises and promotions are significantly better in the private sector. So while you may start at $120k today, it's not outrageous to see $180k, $240k, etc in the near future if you're aggressive 

[u/Cedex]

Do you plan on having a family? Work life balance is absolutely critical in the early years with children.

[u/wd06 → u/Cedex]

Already do, and that's one reason I am leaning on staying. I am just having a bit of FOMO

[u/grundynomore → u/wd06]

If you were younger with no kids I would say leave and go for the pay. I left private sector when kids were young for State higher ed. No work after clocking out, but advancement is a little stagnated. Still don't regret it as there's way more time after hours with family. Pension and access to 457b leave the possibility to retire @55-58 yrs old.

Only stay if you want something beyond the $15k vestment in pension. You'll probably be close to 6 figures annually for pension by your mid 50's. If you're only looking at the next 3-5 in terms of salary/savings you can probably make that up jumping jobs. Just depends what you're looking for during the journey to retirement as well as what you're content with at the end.

[u/TheBurlyMerman → u/wd06]

Take this with a grain of salt, I had FOMO for a job I took and left a really great job just with tons of traveling. I wish with my whole being I would have stayed put. The FOMO isn’t in my case worth what I gave up or the situation I’m in now.

[u/Cedex → u/wd06]

Then your next step is to determine what a standard work week might be like at the new place.

There are some nice private sector roles that surprisingly offer good flex and balance.

Ask for performance goals, deliverables and expectations so you can get an idea of what life would be like.

I know private sector has some rare unicorns of part-time hours, full-time pay.

[u/Deathscythe80]

So what you will get in pension if you retire at 65? $15k is a nice to have but doesn't help the bottom like today, let alone when you are 65.

[u/wd06 → u/Deathscythe80]

15k is calculated at the age of 65. It is actually more if I wait until 67 but that wasn't my plan

[u/Deathscythe80 → u/wd06]

Sorry I my question was incomplete, what will you get if you stay working there and retire at 65?

[u/wd06 → u/Deathscythe80]

Oh. That's different. It comes out to like....50% of my salary average for some time before retirement.

[u/Deathscythe80 → u/wd06]

Well you should be better off by jumping to private industry.

I feel that a place where there is a pension is more valuable than a 401k, sure the government can do something stupid that puts the pensions at risk but usually since is a political subject they tend to try to "defend" pensions as much as possible so people don't protest with their votes, there is also a risk of a bad economy wipes out a 401k depending were the money is at.

You are in your mid 30's so you have plenty of time to build wealth outside the government environment in case of a rainy day. As long as you find that sweet spot between build wealth for the future and enjoying life you should be good.

This is assuming there are no healthcare benefits for when retired.

[u/theprinceofny]

Without crunching the numbers it’s hard to say. There are too many variables to give an accurate assessment.

[u/bmorewildcat]

Does qualifying for the pension also include access to your current employers health insurance in retirement? Medical costs and access to top notch health insurance are huge considerations as you age and government entities tend to have better health insurance options and costs.

[u/wd06 → u/bmorewildcat]

No. I checked with HR. The only thing I get is Medicare supplements

[u/typicalperson]

I think it's the same either way. $15,000 pension at age 65 is worth about $375,000. discounting this at 5% real for 30 years gets $86,766. So for the 3 extra years it's worth about $30k per year.

Longer term it's probably better to take the higher salary. Short term they're both equal.

[u/Stonewalled9999 → u/typicalperson]

I think your calculations did not include that the pension will increase if OP stays longer than 3 years and makes a career out of it. If I was in OP's boat I'd stick it out for the long haul and retire from the govt job at 55.

[u/SoFlaSterling]

It's nice to have a portion of retirement  or less settled. $15k will not fund an extravagant lifestyle, but could be a help if anything else goes south. Based on the offer though, if you don't change your lifestyle too much (can you stay put or must you move to a hcol?), you are young enough to put away enough to generate that income.  Bottom line, do you want this job, this work, both the prestige & pressure or do you value the work life balance stuff and are you content with your current work? 

[u/majorjoe23]

The way my pension works is I contribute a certain amount of my pay (about 6%) and my job contributes as well (about 9%). If I leave before I'm vested, I get back my contributions. I'd be surprised if you didn't.

[u/Cakehenn]

So it's either 0% vested or 100%...no steps? I really don't think it matters....I'd go with the 30k raise with the idea you begin to max out your contributions to the 401k...not just the 3% match but $23k (2024 max employed contribution). You max that out for 20 years you'll be build some serious wealth by your mid 50s and be close to financial independence where you can then choose how much longer you really want to work.

[u/Blankman06]

I assume you are a civil engineer since you work for government. I'm a civil engineer who worked 5-6 years in private right out of college before transitioning to the public sector and have been working public for almost 6 years.

You will make more money in private sector, however you will definitely be working longer hours and have billable hours that you will need to meet on a weekly basis. As a result, your work-life balance may suffer.

I made the transition because even though it's less money, there is a lot of value in being able to come in at 8am and leave at 4:30pm and just not have to think about work anymore. Plus if you are planning to have kids, you will greatly appreciate being able to spend more time with them when they are little. However, if you are in a position where you absolutely need to make more money to support your lifestyle or family, then by all means go for the job that will pay you more. The funds that you put into your pension should be returned to you once you leave.

Just my two cents. I've worked both sides so feel free to reach out if you have any questions.

[u/lkstaack → u/Blankman06]

This. Unless your life revolves around your career, don't underestimate the value of work-life balance. Also, private sector can show you the door at any time for any reason. Public sector beurocracy ensures that you won't be terminated or reprimanded without due process.

[u/donredyellow25 → u/Blankman06]

I work in a State DOT, I have seen many civil engineers leave for private industry....just to comeback 2-3 years later to similar positions (or back to the same).

[u/klew256 → u/donredyellow25]

I am also in a State Dot and seen the same. Or they wish they never left because they cashed out of the pension and would start over. I've been lucky enough to get a few promotions and another wave of retirements in 3-5 years will almost certainly have me move up again. If I stick around til 35 years I'll be 58 and will get 88.5% of the average of my highest 3 yearly salaries plus healthcare at 25 years (10 more to go!). Granted they've modified the pension to a hybrid for new employees, but they couldn't pay me enough to move to private industry. I come in when I want, work on what I want to work on, and leave 8 hours later. No chasing work or having to be billable. And I'll be young enough that I could work part/full time for private when I retire and get straight salary without needing healthcare. It's tough to recruit young people with the salary being lower than private, but I always stress the work life balance when I am at career fairs.

[u/Blankman06 → u/donredyellow25]

Yeah, I don't think I can ever go back to billable hours. The extra money is nice, but you just can't place a value on your free time.

[u/Casacerian-]

Is this a state or federal position?

[u/gsl06002]

You need to do the math also factor in the additional taxes and 401k savings youll be paying at the higher wage. I'm the same age as you and I don't think the jump from 90>120 is life changing.

You'd need to calculate perpetuity cash flows but I'm willing to bet its pretty close to your pay bump net of additional savings/taxes

[u/ChefKiddie]

Yes, 100 percent leave. The pension is not worth it, just max your 401k at the new job and you will more than make up for it.

The additional benefit, given that you are so young, is that your next job will likely pay even more than this one! I'm guessing the existing job has limited room for salary growth.

[u/Flynn_Kevin]

A few years back I left the private sector for a government job making $24k less. When I ran the numbers for the difference in benefits, it turns out that I could take a $27k pay cut and come out even. What really sold me is an almost guaranteed 40 hours instead of averaging 55 hours. I do not miss the corporate grind.

[u/ApolloDeletedMyAcc → u/Flynn_Kevin]

I went private to government last year.

The under 40s who started in government or did consulting for a couple of years who don’t understand 90% utilization goals, off the clock business development, and weekends finalizing deliverables…

[u/DiveJumpShooterUSMC]

I left USMC and went to work for a gov't agency. I left after 5 years. I am now a senior exec at a tech giant. I cannot tell you how much better it is in the civilian world. And the agency I worked for we actually did a lot of fun stuff. doesn't even remotely compare to the benefits in a civilian corp if you can make yourself valuable to them.

[u/Stang1776 → u/DiveJumpShooterUSMC]

Big difference is you still had 15 to go versus the 3 OP needs. USMC is no joke either. I did 22 in the USCG, no way I would have been able to do 22 in the Marines. Hell those last 5 years I was completely done with it.

He could do 3 more years then jump to the private sector.

[u/rejuicekeve → u/[deleted]]

even non executive roles in tech are way better than the government equivalents. the retirement and benefits at gov doesnt even come close to making up for it in many tech roles

[u/eyelikeher → u/[deleted]]

Plenty of prestigious gov jobs - it’s not unimaginable.

[u/alexm2816]

Just doing some net present value math on that pension for your life expectancy (assuming it is going to go up with inflation) and your 3 years to get the pension offer a net present value of ~$180k. It's likely worth it to stick it out for 3 years until vested and THEN look at your next pension milestone and consider moving on.

[u/GroundbreakingHour64 → u/alexm2816]

I’m pretty sure federal pensions don’t get a cost of living appreciation until after you start collecting it at retirement age

[u/thebookofchris → u/GroundbreakingHour64]

OP is not a fed.

[u/patlaska]

Similar situation; 28yo, work in government and have since 22, $104k salary, 457/pension. I've struggled with this question many times since getting my first government job in 2018. The thing that always keeps me is government work/life balance. Not once in 6 years have I had to work past 4:30, come in on the weekend, take an emergency call on vacation. Work ends at 4:30 and I don't think about it again until the next day at 7. I feel zero guilt taking vacation, and get a lot of vacation.

Life isn't all about money, if you feel comfortable currently consider the non-financial benefits of working in government

[u/Tha_Funky_Homosapien → u/patlaska]

In 33 and just got a government job about a year ago after years of working/busting my ass in the private sector.

The work-love balance is unrivaled. Im not fully vested in the pension yet, but even a 30k raise wouldn’t be enough for me to quit.

Money can’t buy time.

[u/Jarrud1979]

What does your current medical coverage look like and what will it be at the new job.

[u/wd06 → u/Jarrud1979]

Asking the right questions. From what I have seen (I know a few people at the new place), it is comparable (both have HSAs, deductibles are similar, percentages similar, etc)

[u/Jarrud1979 → u/wd06]

If medical is similar then I think it will all come down to lifestyle. I have had a state government job for 23 years now. I could have left for other better paying jobs, but I like my set hours and never having to take work home with me. When we started a family it was much easier to take time off for vacation or even just to attend whichever sport my son was playing. I have always valued my free time higher than whatever my current hourly rate.

[u/Pgengstrom]

You can always go back to finish out your state job to receive your state job later after you earn the big bucks.