Which of the two?

[HatePayingTaxes]

Based on your career experience, which of the two paths would you take?

1. Stable company, pension/good benefits, good hours. Most likely stay in one company until retirement.

2. Change jobs every 2-5 yrs. More interesting than #1. No pension. Uncertain hours. Salary 30% higher than #1.

#1 is the traditional stay in blue chip company until you retire and #2 is more of a silicon valley programmer types who change jobs often but gets to do different things. Which route would you take if you can start over again and why?

 

[W2R]

Either one would be a reasonable path towards retirement, as long as you realize that with no pension you need to save more in #2 than #1. My preference is path #1, and as a federal employee that is what I ended up following.

 

[obgyn65]

I would take #1. It is the safer route.

 

[Retch The Grate]

I've been doing #2 my entire career, can't even imagine doing #1. First, jobs and companies are always uncertain in my industry, and secondly, when the opportunity for a cool project, or career advancement, or the chance to start my own company comes up, I want to go and do those things!

This is also why I am more interested in the FI than the RE. I love making games, I just want to be doing it entirely on my own terms eventually. One big company forever doesn't lead in that direction.

 

[MasterBlaster]

Ah yes, the security versus compensation dilemma ....

Are you confident that choice #1 will always be as stable as they claim? Lots of my peers expected such and were downsized or the companies merged/were bought out/relocated. Many of those secure pensions somehow converted into lump-sums at very unfavorable rates giveing people with decades of service a fraction of what they thought they had coming.

The only real security is saved money and your marketable job skills.

Things change over the years.

 

[HatePayingTaxes]

MasterBlaster - That's what I expected but needed to hear from someone with more experience (I'm only 8 yrs into my career).

Any other inputs will be appreciated.

 

[donheff]

MasterBlaster beat me to it. I chose the safe Federal Government version and it worked out fine. But you can't predict what is going to happen with your blue chip or even the government. Take what seems like the most personally rewarding job (compensation and benefits, opportunities are all part of that equation).

 

[M Paquette]

I would take #1. It is the safer route.

Caution: It's only 'safer' if the company actually fully funds that pension with reasonable, conservative assumptions. It's amazing how many pensions from companies folks thought were good and stable turned out to be badly invested, with goofy assumptions (16% annual asset return? Really?).

 

[FUEGO]

Are you confident that choice #1 will always be as stable as they claim? Lots of my peers expected such and were downsized or the companies merged/were bought out/relocated. Many of those secure pensions somehow converted into lump-sums at very unfavorable rates giveing people with decades of service a fraction of what they thought they had coming.

The only real security is saved money and your marketable job skills.

Things change over the years.

My thoughts exactly. I guess I would take what is behind door #2 since we don't know that choice #1 will work out like we think. After the fact, it may be perfectly clear that #1 was superior to #2.

But for everyone who puts in an honest 30 years and retires with a full pension, there are probably a handful of others that had pension bennies frozen at some point and ended up defaulting to choice 2 with a tiny pension. Or got laid off after 15-20 years, and same result - tiny pension and finding something else a la #2.

In my own life, with the benefit of hindsight, I am very glad I ended up doing #2. If I was pursuing #1, I would have 15-20 years of wearing the golden handcuffs to get a pension. As it is now, I have accumulated enough assets with less than 10 years working such that I won't have to work many more years to be FI. In fact, I almost wish I would have switched jobs more often, as I got pretty bitter waiting out my six years of vesting for my retirement fund at the previous job, not to mention skills got stagnant and I failed to diversify those skills (until the job switch six months ago which is working out beyond expectations).

There are others in my industry who look back after 15-20 years of working in private industry, hopping jobs every 5 years or so. They wish they had started and stayed with a public entity with pension plan since they haven't saved that much in the 15-20 years since they started working. I guess the certainty of knowing that after another 10-15 years you could retire with full COLA pension does look pretty appealing when you haven't saved much after working 15-20 years.

 

[rescueme]

I retired from a #1 company after 28+ years. I had various j*bs before that, but the responsibilities of a young family had me look at what it not only meant to me, but also the lives of those I had responsibility for, when a chance to join a megacorp came about.

Over those 28 years, I had many positions (all within the IT area) leading to more responsibility, more pay (more than I would have ever thought), along with a lot of challanges (including wor*ing with, and leading teams not only in the US, but also at overseas sites). Believe me when I say that my time there was truly "interesting". A megacorp life dosen't necessarily mean that time there has to be boring - it's all about grabbing opportunities as they arise.

For me (being somewhat an introvert), #1 also appealed to my personal "internals".

If I had no family and not an introvert, #2 might had been a good option during my younger years.

Most importantly, I have no regrets in that decision made many years ago.

As for what you should do? My only suggestion is know yourself, and those around you that you share a significant relationship.

 

[73ss454]

If there is still such a thing described in #1 that's the way I would go.

 

[Brat]

IMHO the risk of #1 is that your faith that their pension program will not change. I am now 70 and have seen many employers with the fringe benefits programs you describe evaporate. My mother once told me of a friend who worked for such an employer, then when he was in his 50s the company was sold and terminated the retirement program. He committed suicide, all of his plans were predicated on that program.

 

[Rambler]

Well, I took a different road, I guess. I'm kind of like rescueme in that I'm a little bit of an introvert (who can be an extrovert when the necessity arises), I've been at the same company for nearly 26 years, and it will be somewhere between 27.5 and 30 when pull the cord. I've also been given many new assignments and challenges over the years. I even tried to resign (for family reasons) but the boss gave me a transfer instead that allowed us to take care of family responsibilities. I've also been compensated well and I have progressed further than I ever thought possible in both role/title/position and in compensation.

All of the above said, our megacorp does not have a pension plan at all. I was only able to participate in the 401k for about 3 years. There were a few years that there was a black hole between the deferred comp plan for highly comped employees and the 401k limit (at the time), so I was on my own in terms of retirement savings for several years.

Were I to do it all over again, the only thing I would have changed is that I would have gotten myself more education on saving, investing and retirement while I was in college or in my early 20s. I did save a lot in the first 8 years of my career, a little less in the following 6 years, and the huge amounts in the next 12 years. But it wasn't until maybe 6-8 years ago that I seriously began educating myself on investing.

I think what I am trying to get across here is that there is more than one road to FI and ER. I just didn't know it at the time. I've always known I wanted to ER...I had elaborate had written and hand calculated spreadsheets from the time I was a junior at the university (no PCs back then). But, they were relying on the bank CD interest rates of the time, which were over 10% (my spreadsheets used 10% growth rates). I just think that it is important to pick a path and stick with it the best you can, but at the same time remaining educated and flexible enough to bend with what life throws at you, and with the options that are presented to you.

Good luck

R

 

[growing_older]

The only real security is saved money and your marketable job skills.

You can accumulate your own retirement funds in either #1 or #2. The problem comes if you pick #1 but then the company and/or the pension are not as certain as you planned on. Many, many people have been burned by this.

 

[FIREd]

I went the #2 route. When I was younger, I didn't spend much time worrying about securing a retirement income. Pay and immediate benefits like health insurance were more important. Of course, after 2 major market corrections, I can now see the appeal of a secured pension.

But, in hindsight, I am happy with my choice. There is no way I would have been able to retire as early as I did with route #1. I also like to be in control of my money. For better or for worse.

 

[SteveR]

I have done both.

Company #1: hourly then salaried job. No 401k but they did have a defined pension which vested after 10 years (I left after 5).

Company #2: full salaried position. 401k, stock options, profit sharing, moderate pension and ER options. I retired at age 50 after 25 years of service. I have dental and medical waiting for my to use. (covered by DW's company insurance as it is cheaper per month than mine.)

Company #3: salaried position. No pension, limited 401k, stock options were a joke. No post retirement medical even possible. I left them after 5 years (no one retires...you just stop working there).

More and more companies are dropping defied pension plans so all you are left with is income, options, and 401k (or similar). Changing companies usually gives you more of a salary bump than staying with the same company. I would have taken this route if I had not already gotten sucked into my 20+ years and hated to throw any of it away.

 

[chris2008]

I started with #2, then after 15 years switched to #1.
IMO we all have to learn that there is nothing like a stable company any more.They all have their reorganisations and try to reduce headcount. So when I chose #1 I was aware that it might not be as safe as it looked like from outside.

IMO I had the best of both models: the excitement, more intersting jobs and unstable hours when I still was more ambitious. Now more regular hours, stability and long term relationships with colleagues.

I am 8 years in #1 now and will ER with DH in 2012. And if I am lucky another reorgansiation (+ package) might come my way just in time....

 

[Alan]

I don't think #1 exists in the private sector anymore. I chose #1 26 years ago when I had a young family and was head-hunted by a megacorp from the small company I was working for. The megacorp did well by me in the end, even though it no longer exists, and I have DB pensions, but it was a very bumpy ride with merges, purges and sales of business units to other companies etc. I don't believe the megacorp route I chose was any less stressful or financially certain. Because the DB pensions were not transferable and because of merges and joint ventures I have ended up with 4 of them from 2 companies in the UK and 2 in the USA.

DD joined a megacorp straight from college 8 years ago although even then it already did not have a DB pension. She is probably about to go the #2 route now that she is 30 yrs old. So far she has passed 2 interviews, and if she passes the IT test next week expects her and SIL to move to the Seattle area from Texas and start a new phase of their lives. We both think she is making the right choice as it is something that she is really excited about and wants to do. SIL is already working for a small company and is confident he'll find work easily enough.

 

[devans0]

I chose option 1. I started at nineteen with MegaCorp growth. I didn't know about investing until much later but did get an affordable house, then stayed and paid it off. Then I invested in a major way. Wife was in option 2, though not by her choice. Looking back, our choices were "job benefits allocation" that allowed us to get the benefits and tradeoffs from both sides.
Right now, defined benefits are still offering better returns. However, DB is frozen and self investing will soon overtake it for me. DBs also has given us the opportunity to invest for better returns, since DB give bond-like risk/returns.

 

[robbridg]

I took path 2. I don't have a problem saving for my own retirement. And I get too bored doing the same thing year after year after year after........................

 

[HatePayingTaxes]

Thanks everyone for the feedback. I guess one thing is clear. There is no certainty in defined benefit plan, which for me is #1 reason for option #1. Also, based on my personality and my job history, I tend to get bored after 1 yr of working somewhere if I'm not challenged. Don't want to work at #1 where I'm not growing and have that golden handcuff. Wow, that'll be like prison.

 

[freebird5825]

Door number 1, no hesitation.

I w*rked private sector for 8 years, then switched over to a fed civilian j*b. The poor j*b market where I live had a lot to do with the decision.

Sometimes it is possible to "change j*bs" within the same organization or company. There are always special projects that pop up and need to be filled quickly. I actively sought these opportunities as they happened. I believe the buzzword was "career broadening".
Taking on new assignments kept me challenged mentally and for many years, greatly w*rked in my favor.

 

[eytonxav]

For me, I chose #1 for 26 years, and as I progressed with mega corp, the compensation was outstanding and most likely would not have been exceeded on the other path.

 

[rkser]

I would take # 1. While you are still young you are offered jobs like #1 generally. Do not underestimate stability & predictability.

IF later in life something goes wrong with #1, you can always try for #2.

Good Luck

 

[martyb]

Either one would be a reasonable path towards retirement, as long as you realize that with no pension you need to save more in #2 than #1. My preference is path #1, and as a federal employee that is what I ended up following.

Same here...