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Started By
Message
Job choice: 20 year pension at ~50%?
Posted on 4/29/16 at 11:58 am
Posted on 4/29/16 at 11:58 am
Job is in a major market where cost of living is HIGH.(homes >$1 million)
This is a City government position where there is a designed step process of about 6-8 years:
0-1 year-65k Probabtion
1-2.5 years 80k Standard
2.5-4 years 95k Senior
4-5.5 years 110k principle 1
5.5 to 7 years 125k principle 2
7 years plus 140k(MAX) (as of 2016)
Not really promotions, just designed steps. You can retire after 20 years with about 50% of your last 3 year average.
I currently make about what the first year makes, but will likely never be in the $140k range without changing jobs(cap now about 85-90k). Cost of living is soo much less, that I could save here, but likely not save there.
Does having a pension that would gross you about $70k/year(2016 dollars, unsure about future) make not being able to save worth it?
ie: Here I could save and buy 2-3 homes during that time, while over there I build nothing and rely only on what the City claims it will give me when I'm done(more if I stay longer)
This is a City government position where there is a designed step process of about 6-8 years:
0-1 year-65k Probabtion
1-2.5 years 80k Standard
2.5-4 years 95k Senior
4-5.5 years 110k principle 1
5.5 to 7 years 125k principle 2
7 years plus 140k(MAX) (as of 2016)
Not really promotions, just designed steps. You can retire after 20 years with about 50% of your last 3 year average.
I currently make about what the first year makes, but will likely never be in the $140k range without changing jobs(cap now about 85-90k). Cost of living is soo much less, that I could save here, but likely not save there.
Does having a pension that would gross you about $70k/year(2016 dollars, unsure about future) make not being able to save worth it?
ie: Here I could save and buy 2-3 homes during that time, while over there I build nothing and rely only on what the City claims it will give me when I'm done(more if I stay longer)
3
Posted on 4/29/16 at 12:14 pm to Kujo
My primary retirement savings are in a pension. I would tell you that you've got to make this decision on your own as part of a larger plan, just like any other retirement plan.
The biggest thing for me and the way ours operates is the vesting schedule. Ours is 10 years. If I had left prior to 10 years, I would have taken ONLY my contribution and a portion of the interest, unlike a private company's 401K where if you leave after whatever period they establish (usually shorter), you still get to keep the amount they put in to match. Basically, you can get in a situation where even if you dislike the work, you're almost crazy to leave until you hit the vesting period. Its one thing to leave a year or so worth of matching contributions on the table, its a whole different story to leave 8 years worth.
The biggest thing for me and the way ours operates is the vesting schedule. Ours is 10 years. If I had left prior to 10 years, I would have taken ONLY my contribution and a portion of the interest, unlike a private company's 401K where if you leave after whatever period they establish (usually shorter), you still get to keep the amount they put in to match. Basically, you can get in a situation where even if you dislike the work, you're almost crazy to leave until you hit the vesting period. Its one thing to leave a year or so worth of matching contributions on the table, its a whole different story to leave 8 years worth.
Posted on 4/29/16 at 12:25 pm to Kujo
Do some research on the health of the pension plan. Many municipal plans are grossly underfunded and the problem is often carefully ignored by those who should be paying attention.
Posted on 4/29/16 at 1:02 pm to Kujo
quote:
Does having a pension that would gross you about $70k/year(2016 dollars, unsure about future) make not being able to save worth it?
A healthy pension is a very good thing. Also never underestimate your ability to save if you are diligent.
I have a pension and it is a major part of my retirement plan. I also have a 401k that I've been maxing out for years.
Just think about this. Let's say you make it to 20 years and then you retire from the City Gov't position with a nice pension. You can then go work somewhere else in a lower cost of living area while you're collecting that fat pension.
Posted on 4/29/16 at 3:53 pm to AUFanInSoCal
If you have any questions now, 20 years from payday, then I wouldn't do it.
First off, as mentioned, the pension could go bankrupt and you lose a good portion of it.
Second off, you are investing 20 freaking years of your life to it. You better freaking love it and feel great about your decision. There is no way I'd do a job just because of a great pension, if everything else is equal and one job has a pension than that certainly is a tipping point. Beyond that, I'd personally prefer to save and earn the money to where it is in my hands only.
The problem with a pension as your main retirement plan is that upon your death you leave your family with much less. So not only are you risking it goes bankrupt but you are losing the principle also.
First off, as mentioned, the pension could go bankrupt and you lose a good portion of it.
Second off, you are investing 20 freaking years of your life to it. You better freaking love it and feel great about your decision. There is no way I'd do a job just because of a great pension, if everything else is equal and one job has a pension than that certainly is a tipping point. Beyond that, I'd personally prefer to save and earn the money to where it is in my hands only.
The problem with a pension as your main retirement plan is that upon your death you leave your family with much less. So not only are you risking it goes bankrupt but you are losing the principle also.
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