30 years old, should I quit my government job?

[techboomie]

I want to retire as soon as possible but it seems like it is going to take forever.

Age:30 Single
Income: 68K per year
Taxable Account: 200K invested in stocks&mutual funds & etfs
Retirement Accounts (457 & Roth Ira): 110k
Emergency Fund: 10k

Debt:
Mortgage: 230K(House value is probably around 280k)

Work for the government and it seems like I wont be able to retire until i'm 60. I don't want to work so long. What are some things that I could do to speed it up?? If i retire from the government, my pension will be 70% of my highest salary. Health insurance will be covered.

I want to quit my government job and do something else but the government benefits are just too good for me to leave. Should I quit my job or just stick around another 30 years? Confused and stuck!

 

[ziggy29]

Welcome to the forum!

This post is a reminder of the old adage that "the grass is always greener on the other side" (or over the septic tank, as Erma Bombeck remarked). I suppose that is the downside to killer benefits that the private sector just doesn't get any more: if the job starts to suck, it's harder and harder to leave because the bennies become golden handcuffs.

Frankly, unless your job is awful, I think I'd stick it out. (Then again, I'm a private sector worker who is somewhat envious of public sector pensions.) But I'm not in your shoes, and if you have other opportunities elsewhere (with significantly better compensation to offset what would certainly be worse benefits and less security), it's a call you'd have to make.

I'd close by suggesting that I think in the next 20-30 years, the ranks of early retirees are going to be overwhelmingly dominated by public sector employees and that "retirement" may become an endangered species for folks in the private sector except for the few who plan early and save/invest aggressively, so you have to decide where "early retirement" is on your list of priorities. If it's high, the government job needs to stay.

 

[beowulf]

You clearly don't work for the federal government - pensions like those are long gone. I'd say you should go wherever you can earn the most money. If you don't plan to stick around for the gov pension, you are a free agent and should sell to the highest bidder. I can't believe the gov (state or local) pays more than private industry.

 

[rescueme]

- I want to retire as soon as possible but it seems like it is going to take forever.

- I want to quit my government job and do something else

So which one is it? Do you want to retire (e.g. no longer work) or still want to work but move on to something you are interested in?

I'll assume it's the second statement. At your age I had a family so the answer was more obvious, from a survivorship view.

However for me (and looking at your situation), I would say investigate moving on and do what you want with the rest of your working life. An additional 30+ years doing something you don't like to do (just because of benefits) is not a great option for a third of your life, IMHO.

BTW, I'm in my early 60's (retired at 59), so I've been there ...

 

[W2R]

You clearly don't work for the federal government - pensions like those are long gone. I'd say you should go wherever you can earn the most money. If you don't plan to stick around for the gov pension, you are a free agent and should sell to the highest bidder. I can't believe the gov (state or local) pays more than private industry.

Yes, if he worked for the federal government he wouldn't necessarily have to wait until 60 to retire with health benefits and (smaller) pension, either (I did, but it is possible to retire earlier).

I notice on his profile that he lives in California, and if he is a California state employee I think that adds a higher level of risk (given the financial situation of that state right now).

Here, it seems like state government positions are sometimes used as stepping stones to federal government positions. Perhaps he could do that and get tied in with the federal version of "golden handcuffs", something with which I am too, too familiar.

 

[techboomie]

I work for the local government, pay is better compare to the federal government. Nothing is wrong with the job, people are nice and it's a stress free job. I just feel I could do so much more if I work in the private sector. I feel like I am getting alzheimer's pretty soon. Another big plus is the security of the government job. I just don't want to regret this later on in life. Giving up such a cush job for the hectic private sector. I could retire at 50 with the government but the pension is going to be like 30% of my highest salary. I see people retiring like between age 35 to 40 on this board, I want to do that too, how do they do it? With the government job, I feel like I wont be able to retire early; I will have to wait until I'm 60.

 

[plex]

I think there is a high risk your state pension will be frozen at some point before you reach 60, considering how other government sectors have been recently doing this.

That said, if you do not have oppurtunities (an offer in hand) with significantly higher direct compensation in the private sector, then the best thing you can do is reduce your expenses as much as is reasonably possible for you.

Reduce your expenses as much as you can, while at the same time making sure you are comfortable with what you are spending. It takes awhile to figure out what areas you can easily cut, and how to save money. Expenses are the #1 most controllable factor after you have a secured job path, and have an investing strategy setup. Average yearly expenses have a gigantic impact on how early you can retire (it can be reduced by decades).

To answer your latest question, the difference between me retiring at 35, and 45, is average yearly expenses. If I retire at 35, I would have to live on $30K/year while working and after retiring (in today's dollars). If I retire at 45, I would have to live on $60k/year while working and after retiring (based on my own income). It mostly revolves around your current and expected expenses (these aren't necessarily the same, but it is easiest to assume they will be, they will very likely be at least somewhat close). If you are curious, I can and expect to be able to comfortably live on $15K/year, for my own expenses, but I am at the extreme low end, even for this forum, but quite comfortable (this isn't doable btw in California, you would likely need to move to a lower cost of living state at retirement, most of the rest of the country is less expensive than California).

 

[brewer12345]

tech, I am a few years older than you are (36) and had some similar yearnings at your age. I ended up chucking a very stable, secure job to go try for bigger fish during the boom. I ended up making a very large sum of money in a short time and then suddenly being tossed out of work at the same time that my portfolio took it in the teeth and lots of other people in my profession were suddenly on the street. Now I have a very secure job with less pay and excellent benefits. The "big fish" job was exciting and I certainly learned a ton while doing it, but it also had significant costs in terms of my health, family life and income stability. So its not a free lunch.

My suggestion would be to see if you can have your cake and eat it too. You already know that you are on track to make it to retirement pretty safely at your existing gig. Instead of swapping that for a riskier job with larger potential payoffs, how about doing something with upside on the side. Start a small business, do some freelancing, invest in some foreclosed real estate, etc. There are lots of possibilities taht will allow you to scratch the itch without giving up the sure thing.

As for how my story turns out, well, for a while there it was looking like I might retire by 40 (if the job didn't kill me). Now I have a very high probability of being done by 50 (with very little risk of it not happening). Since my job is more tolerable and my kids will not be off to college until I hit 50, that is not so terrible. OTOH, if I hit the jackpot with my investments maybe I will retire a lot sooner. Not teh end of the world either way.

 

[clifp]

You clearly don't work for the federal government - pensions like those are long gone. I'd say you should go wherever you can earn the most money. If you don't plan to stick around for the gov pension, you are a free agent and should sell to the highest bidder. I can't believe the gov (state or local) pays more than private industry.

Although Federal pensions are no longer as generous as they use to be they are still significantly better than average private pension, and of course vastly better than 80%+ of American who have no defined benefit pension. (Local and state pension plans are even better, but that is for another rant)

I think the TSP plan is better than any private sector 401K; lower expenses and the correct number of choices.

Finally lets talk about wages. The average wage in the US is 40K and the median is only 26K the median household (i.e a family) income is 50K. These figures are 2007, 2008 and almost certain to drop in 2009.

In contrast as 2006 the average Federal employee made 63K and the median was 60.6K (There aren't any CEO, movie, rock and sport stars making tens of million to make the average much higher than the median)
Thus the median Federal employee make 10K more than the median Family, and has better retirement and health coverage

So I agree with Ziggy, while you won't get rich working for Uncle Sam ability to retire before your late 60s is much better working for the government than private companies.

In this economy with un and underemployment in the 17-18% range. I certainly wouldn't quit a government job, without a really fantastic opportunity.

 

[W2R]

Although Federal pensions are no longer as generous as they use to be they are still significantly better than average private pension, and of course vastly better than 80%+ of American who have no defined benefit pension.

A 30-year-old federal employee would be in the new pension plan (FERS) since he wasn't old enough to work under the old pension plan.

He would have to work for 64 years as a federal employee to receive a pension of 70% of the average of his highest three years' salary. So, he would be around 84 years old by that time - - he would be unable to retire at age 60 with such a pension. That is what Restonham and I were remarking upon.

(Edited to add: This is assuming that he is a "normal" federal employee, and not in a job with special retirement provisions such as LEO.)

 

[clifp]

A 30-year-old federal employee would be in the new pension plan (FERS) since he wasn't old enough to work under the old pension plan.

He would have to work for 64 years as a federal employee to receive a pension of 70% of the average of his highest three years' salary. So, he would be around 84 years old by that time - - he would be unable to retire at age 60 with such a pension. That is what Restonham and I were remarking upon.

I understand the FERS plan is much less generous than the previous plans (which is akin to most state and local pension plans). However, just as way of comparison here is some figures from a "good" private pension plan.

My dad work for almost 30 years for Mead Johnson which was acquired by Bristol Myers Squibb (and just recently partially spun out). He made an above average salary as a salesman and retired early. My mom's survivor pension (which is 2/3 of his) 27 years later is $528/month even after several "cost of living increases" This is a fraction of her Social Security check and as percentage of his inflation adjusted salary much less than 10%. So even FERs would be many times more generous.

 

[Walt34]

Strongly recommended reading: What Color is Your Parachute? by Richard N. Bolles.

I took a page from his book and instead of changing jobs, I persuaded my employer to create the job I wanted. Then, of course, I filled the position.

Reality check: This also was in local government and it took almost five years to make that happen. But for the last nine years of my employment there I went to work thinking "I can't believe that they're actually paying me to do this!"

 

[W2R]

I understand the FERS plan is much less generous than the previous plans (which is akin to most state and local pension plans). However, just as way of comparison here is some figures from a "good" private pension plan.

My dad work for almost 30 years for Mead Johnson which was acquired by Bristol Myers Squibb (and just recently partially spun out). He made an above average salary as a salesman and retired early. My mom's survivor pension (which is 2/3 of his) 27 years later is $528/month even after several "cost of living increases" This is a fraction of her Social Security check and as percentage of his inflation adjusted salary much less than 10%. So even FERs would be many times more generous.

Clifp, Beowulf and I (both feds) said that the 30-year-old OP cannot be receiving 70% at age 60 if he is a federal employee, and I am sorry if you thought we were implying anything else.

As for your point, I am sure that your mother is not getting much in her survivor's pension and do not dispute that in any way, shape, or form. (edited to add: It's a darn crime, too, IMO - - after 27 years of work, employees really should be treated better than that.). If a federal employee worked for 27 years and retired at 60, I believe he/she would start out getting 27% of his/her average salary (averaged over the highest three consecutive years, partially COLA'd), so that is apparently more than what your father got. It would start out at 27% but would decrease as a percentage of inflation adjusted income over time, due to the lack of full COLA.

 

[Moemg]

My late husband worked for the Federal government for 25 years . He retired under the FERS . His pension was 50% of his last years salary .

 

[W2R]

My late husband worked for the Federal government for 25 years . He retired under the FERS . His pension was 50% of his last years salary .

The rules for the usual FERS basic annuity/pension are very clear, and are publicly available at
http://www.opm.gov/retire/pre/fers/computation.asp

under "FERS Basic Annuity". The basic annuity is 1.1% if you are over 62 and with 20 years of service, or 1% if one or the other of those conditions does not apply.

The rules are also clear for CSRS annuities/pensions (the old, much more generous retirement system), that many present federal employees who were first hired in the 80's still have access to unless they opted out. What's more confusing is when someone transfers from one to the other.

But neither CSRS, nor someone transferring from one system to another, would apply to Techboomie because he is only 30 years old.

 

[techboomie]

Thank you for all your advice. It's nice to know that there are so many government employees on this board. I guess I will just stick around with this job. Great benefits that I will not find anywhere else. Anyone own rental property in another state? I am thinking of doing that.. What are the cost associated with out of state rental properties? Hopefully, that will increase my chances of retiring early.

 

[REWahoo]

Anyone own rental property in another state? I am thinking of doing that.. What are the cost associated with out of state rental properties? Hopefully, that will increase my chances of retiring early.

We had a poster around here a while back who was also a Calif. government worker and really big into real estate. He knew how to buy property that only went up in value. Ask around your office - maybe someone knows him.

 

[jimnjana]

I want to retire as soon as possible but it seems like it is going to take forever.

Age:30 Single
Income: 68K per year
Taxable Account: 200K invested in stocks&mutual funds & etfs
Retirement Accounts (457 & Roth Ira): 110k
Emergency Fund: 10k

Debt:
Mortgage: 230K(House value is probably around 280k)

Work for the government and it seems like I wont be able to retire until i'm 60. I don't want to work so long. What are some things that I could do to speed it up?? If i retire from the government, my pension will be 70% of my highest salary. Health insurance will be covered.

I want to quit my government job and do something else but the government benefits are just too good for me to leave. Should I quit my job or just stick around another 30 years? Confused and stuck!

did you find out what your benefits are if you quit early? sounds like you may have vested benefits that are yours, albeit you might have to wait to get them.

 

[Moemg]

The rules are also clear for CSRS annuities/pensions (the old, much more generous retirement system), that many present federal employees who were first hired in the 80's still have access to unless they opted out. What's more confusing is when someone transfers from one to the other.

I think that is why my late husband's pension was higher . He transferred from CSRS to FERS because he has SS credits from when he worked for Boeing .Thanks for jolting my memory !

 

[plex]

FYI:

"California’s huge government pension fund is expected to report today a whopping annual loss of an estimated $56.8 billion, almost a quarter of its investment portfolio.

The loss at the California Public Employees’ Retirement System for the fiscal year ended June 30 is the second in a row for the country’s largest fund. A year ago, CalPERS reported an $8.5-billion loss, as the severe recession began to take hold.

The tremendous drop in value is expected to have a direct effect on the amount of money that the state and about 2,000 local governments and school districts must contribute in coming years to pay for pensions and healthcare for 1.6 million government workers, retirees and their families.

As income from the pension investments fall, the governments would have to make up the difference to meet the state’s pension and healthcare obligations.

And as California goes, so goes the nation.

http://michellemalkin.com/2009....8-billion/"

 

[stevenst]

Hi Techboomie:
You asked about owning rental property in another state.

I have a condominium at a ski resort 800 miles from where I live. It is marketed and managed by a property management firm. It rents on a weekly basis in ski season, and sometimes gets month-to-month rentals in the summer.

My experience has been fairly decent, but not stellar. The property management firm takes 40%(!), but I do absolutely nothing in terms of management, marketing, operations, etc.

The property loses about $3K/year (including debt service, maintenance, utilities, insurance, etc.) , and I use it for about a week per year. It has appreciated by about $90K in the past decade, so if I ever decide to sell it, I will turn a profit.

If you're thinking of a more 'normal' monthly rental, I think it could be very different. I have no experience at this, but I'd worry a lot more about tenant selection and the possibility of 100% vacancy when your tenant moves out. I'll leave this one up to someone who knows more.

Steve

PS: I wouldn't bet on a pension as a primary reason to stay in the job. There's just too much that can be changed over 20-30 years, and you have no control over the changes.

 

[BunsGettingFirm]

see people retiring like between age 35 to 40 on this board, I want to do that too, how do they do it? With the government job, I feel like I wont be able to retire early; I will have to wait until I'm 60.

I don't think that many people on this board retired between 35-40 unless you count the handful of Wall Street types and entrepreneurs. Most are at least 40+ when they retired.

From your handle, I assume you are a programmer of some sort. I'd kill for a job like yours even if I would have to take government pay. All of my private sector engineering jobs were 80% of an investment banking job minus the investment banking pay. I recall one particular nightmare project in which the manager made the wrong call of trying out a new technology and still promised the same 3 month delivery time. Let's just say we did the 3 month sprint 5 times in a row. I basically flushed a year and half of my life down the toilet. I had no time to do laundry or even shop for grocery. At the end, I had shooting pain down my left arm, nightmares about work, and a lack of desire to live. The bonus? A dinner and a $100 gift certificate. Wow, really, you shouldn't have.

If you feel that your day job is a total bore, do some side jobs or do some development work that you have always wanted to do. Heck, accept a half time consulting job. Just make sure you use a different computer than your work computer. This way you get paid for 1.5 jobs and while really doing about 1.2 job's worth of work. It's not exactly ethical, but it will keep you from being bored to death.

 

[plex]

Buns, that reminds me of a temp engineering job I was doing, while studying for the patent bar during the evenings/weekends. It was only 40/hours a week, and only lasted a month, but the pay was awful ($16/hour, no benefits). It was also for a delivery system, and they redid the work about four times, just during the time I was there. I don't want to even imagine what it would have been like if that had been an 18 month job, and it wasn't restricted to a punch-out at 40 hours.

 

[GoodSense]

I asked almost the identical question last year. Please check out this thread. It may be helpful to you: http://www.early-retirement.org/forums/f30/should-i-go-for-a-new-job-35187.html

To update the story, I quit my secure municipal government job and joined a private company. The pay was only slightly better, but my new job gave me a lot more opportunities to travel and eat fancy company-paid meals. On the other hand, since I joined the public sector at the tender age of 21, to be purely profit-driven is an uncomfortable feeling for me, which I did not realize before. Yes, you can say I've been thoroughly brainwashed by the lefties.

Also, it turned out my new job is not as secure as it appeared, due to the economic downturn. Although there is no news for lay-offs, we have been losing money as a company and I don't know how long our company/branch can last. Also, there is a lot more dysfunction in the private sector than I thought.

Do I regret leaving my muni job? Not really. By the time I left, the golden handcuffs were so bad that I felt suffocated. The new job gave me the room to grow and learn new things.

I do have to say that I miss my public sector coworkers. Since there was no competition, we were really like family to each other. My current coworkers, though nice, are somewhat competitors as well, at least for bonuses, etc.

Another freedom that the new job offered is to know that I am able to be mobile. When I was working for the city government, there was a sense that the longer you stayed, the less employable you are elsewhere. I certainly don't have that feeling now.

Ironically, I am now applying to join the federal government. Because of my background, security clearance will take years, so I am in no rush. The reason I decided to return to the government is 1. I actually like the idea of working for the public good, 2. The posts are mostly overseas, which I think would not get too boring, and 3. I can retire after 20 years of service. I am 31. If I can get in by the time I'm 34, I can retire by 54.

After turning 30, my biggest revelation is that life is really too short. I would rather do something I enjoy than sticking to a job I'm indifferent about for job security. That's just wasting my life away. (Of course, if you are within 5 years of FIRE, it may be worthy of an exception)