Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
contractor to federal government
Old 05-28-2015, 12:19 PM   #1
Dryer sheet wannabe
 
Join Date: May 2015
Posts: 11
contractor to federal government

I've been offered a temporary federal government position at a GS-13 Step 1 that's non-negotiable. It's well below my current salary of 105k as a government contractor. I'm 34 years old. I value stability and hope that it's a foot in the door to a career in the federal service, but I also don't like that I will have to work at least 7 years (assuming regular in-grade step increases) to reach my current salary. I'm also not very excited about a temporary position of 2 years. I also feel that I'm skilled enough to remain a contractor, but I'll probably have some nervous times and need to job hop quite a bit. My current job and potential government job are very similar, so comparing job satisfaction is not a factor. This is purely a financial payoff/stability/future of FERS retirement program/etc. decision. If given this situation, would you take the job? Why?
__________________

__________________
whiskeypete is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-28-2015, 12:26 PM   #2
Thinks s/he gets paid by the post
 
Join Date: Nov 2006
Posts: 2,268
Every time we have a "pension" thread, people with government pension say that they've dealt with lower salaries during their career in return for a stable pension. Lots of people respond by saying they don't believe government salaries are lower than similar private sector jobs. Once again, I say they are wrong. In general, the government pays less, but in my opinion the pension and job security are worth it.

Most of my friends made more than I did for years and years. Now I'm retired at 50 and they will be working for who knows how much longer. So, yes, I would take the job.
__________________

__________________
utrecht is offline   Reply With Quote
Old 05-28-2015, 12:35 PM   #3
Dryer sheet wannabe
 
Join Date: May 2015
Posts: 11
Quote:
Originally Posted by utrecht View Post
Every time we have a "pension" thread, people with government pension say that they've dealt with lower salaries during their career in return for a stable pension. Lots of people respond by saying they don't believe government salaries are lower than similar private sector jobs. Once again, I say they are wrong. In general, the government pays less, but in my opinion the pension and job security are worth it.

Most of my friends made more than I did for years and years. Now I'm retired at 50 and they will be working for who knows how much longer. So, yes, I would take the job.
That's what people have been telling me, too. I guess the main concern is that it's not a permanent position, and if I had to return as a contractor in a couple years, I have less bargaining power or leverage with the lower pay. The contracting company's HR could say "Oh, you are making 90k now, we can't give you more than 94k" when I was making 105k just a couple years prior. I know the difference is not as significant as it could be, but it's still a factor to consider.
__________________
whiskeypete is offline   Reply With Quote
Old 05-28-2015, 12:52 PM   #4
Thinks s/he gets paid by the post
 
Join Date: Jul 2002
Posts: 1,037
I'm a federal retired employee, 29 years. We always considered the contractor workforce as temporary as they had to absorb most of the ups and downs of the work required to be done....and the contract was up for re-bid every 4-6 years so there was no guarantee the follow on company would hire the incumbents or offer the same pay/benefits.

That said, why go to a lower paying temp job? You'll need to assess the likelihood that, once in the door, you can find and move to a permanent GS13 position. In my years, promotions to 12, then 13, then 14 were mostly self-initiated.....applied for and competed for the promotions to an opening and needed to be willing to move for some of them (not for the last one). If that possiblility is limited at your location, then I'd pass on the govt job.
__________________
RE2Boys is offline   Reply With Quote
Old 05-28-2015, 01:46 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,254
Quote:
Originally Posted by utrecht View Post
Every time we have a "pension" thread, people with government pension say that they've dealt with lower salaries during their career in return for a stable pension. Lots of people respond by saying they don't believe government salaries are lower than similar private sector jobs. Once again, I say they are wrong. In general, the government pays less, but in my opinion the pension and job security are worth it.

Most of my friends made more than I did for years and years. Now I'm retired at 50 and they will be working for who knows how much longer. So, yes, I would take the job.

My belief is that for upper level jobs the gvmt pays less.... for lower level jobs they pay much more.... it is not a one size fits all....
__________________
Texas Proud is online now   Reply With Quote
Old 05-28-2015, 02:15 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 8,634
A temporary position doesn't provide the Federal retirement benefits discussed above. Is there any realistic expectation that this two year job would lead to a permanent position?
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is offline   Reply With Quote
Old 05-28-2015, 02:58 PM   #7
Dryer sheet wannabe
 
Join Date: May 2015
Posts: 11
Quote:
Originally Posted by donheff View Post
A temporary position doesn't provide the Federal retirement benefits discussed above. Is there any realistic expectation that this two year job would lead to a permanent position?
Please expound on this. I believe I am eligible to the same benefits as a permanent employee.
__________________
whiskeypete is offline   Reply With Quote
contractor to federal government
Old 05-28-2015, 03:29 PM   #8
Dryer sheet aficionado
 
Join Date: Jan 2015
Posts: 47
contractor to federal government

Temp vs term vs permanent. Term and permanent have benefits. Whereas temp is pay only, no FERS/health benefits. At least from how I understand it. Sorry I'm so brief. On lunch break from w*rk.

You may have meant temporary in not to exceed 2 yr-term sense? If so then yes to benefits. If simply a temp position, which I thought was NTE 1 yr max? Maybe we're talking about the same thing?

Sent from my iPhone using Early Retirement Forum
__________________
nate2953 is offline   Reply With Quote
Old 05-28-2015, 03:58 PM   #9
Dryer sheet wannabe
 
Join Date: May 2015
Posts: 11
Quote:
Originally Posted by nate2953 View Post
Temp vs term vs permanent. Term and permanent have benefits. Whereas temp is pay only, no FERS/health benefits. At least from how I understand it. Sorry I'm so brief. On lunch break from w*rk.

You may have meant temporary in not to exceed 2 yr-term sense? If so then yes to benefits. If simply a temp position, which I thought was NTE 1 yr max? Maybe we're talking about the same thing?

Sent from my iPhone using Early Retirement Forum
Yes I'm term not to exceed 2 years. Thanks for helping me clarify.
__________________
whiskeypete is offline   Reply With Quote
Old 05-28-2015, 04:09 PM   #10
Recycles dryer sheets
 
Join Date: Aug 2012
Posts: 138
What is the likelihood that you can turn this term position into a permanent one? If it increases your odds significantly of getting a permanent govt job, then go for it. There are govt jobs that are only advertised internally that you might be able to transition to.
__________________
Live Free is offline   Reply With Quote
Old 05-28-2015, 04:20 PM   #11
Recycles dryer sheets
 
Join Date: Sep 2006
Location: clearwater
Posts: 223
i would take the job. If you are comparing a 1099 job to a w-2 job , to be even a 1099 would need to be paid at least 15% more due to the tax and benefit differences. ( probably more like 25%) You will likely be able to apply for and be hired for a permanent position once you get your foot in the door. Expect the starting pay to be lower, the benefits and tax differences make a huge difference.
__________________
rothlev is offline   Reply With Quote
Old 05-28-2015, 05:08 PM   #12
Dryer sheet wannabe
 
Join Date: May 2015
Posts: 11
Quote:
Originally Posted by rothlev View Post
i would take the job. If you are comparing a 1099 job to a w-2 job , to be even a 1099 would need to be paid at least 15% more due to the tax and benefit differences. ( probably more like 25%) You will likely be able to apply for and be hired for a permanent position once you get your foot in the door. Expect the starting pay to be lower, the benefits and tax differences make a huge difference.
I should clarify further. I am a defense contractor and don't require a 1099 as I work for a large defense contracting company, I'm not an independent contractor. I do agree that federal jobs pay lower, at least in my field.
__________________
whiskeypete is offline   Reply With Quote
Old 05-28-2015, 05:15 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Amethyst's Avatar
 
Join Date: Dec 2008
Posts: 5,874
I would be leery of a "temporary" Govt position unless you're sure there's a darned good chance they'll make it permanent after a 2 years' probationary period.

Carefully compare the benefits (if you haven't already). Benefits = health insurance, leave, bonuses, and retirement contributions.

In my area, Defense, particularly in any STEM field, contracting companies' benefits are often very close in terms of leave (although they'll expect you to work more hours than Govt will), and better in terms of health insurance. Also, Govt. bonuses tend to be quite small, if they exist at all. Think hundreds, not thousands.

Amethyst
__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success to be able to spend your life in your own way. Christopher Morley.
Amethyst is offline   Reply With Quote
Old 05-28-2015, 06:55 PM   #14
Dryer sheet wannabe
 
Join Date: May 2015
Posts: 11
Yea I'm definitely not in a STEM field. I would imagine private sector does pay a lot more with comparable benefits. Thanks for the input.
__________________
whiskeypete is offline   Reply With Quote
Old 05-28-2015, 06:57 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Brat's Avatar
 
Join Date: Feb 2004
Location: Portland, Oregon
Posts: 5,913
Personally, if I needed a job I would take that that job until I found a better one.
__________________
Duck bjorn.
Brat is offline   Reply With Quote
Old 05-28-2015, 07:32 PM   #16
Recycles dryer sheets
 
Join Date: Jul 2009
Posts: 296
Expand your potential as contractor, work hard ...max out your 401 ...your upside potential is much greater. Is it as certain ...no. Will you have to work harder as a contractor ...you KNOW the answer to that. Go for the growth, go for the flexibility to move, to expand into different areas of industry.


Sent from my iPad using Early Retirement Forum
__________________
stephenson is offline   Reply With Quote
Old 05-28-2015, 08:58 PM   #17
Dryer sheet wannabe
 
Join Date: May 2015
Posts: 11
Quote:
Originally Posted by stephenson View Post
Expand your potential as contractor, work hard ...max out your 401 ...your upside potential is much greater. Is it as certain ...no. Will you have to work harder as a contractor ...you KNOW the answer to that. Go for the growth, go for the flexibility to move, to expand into different areas of industry.


Sent from my iPad using Early Retirement Forum
Darn. Not really what I wanted to hear but I appreciate the candor. I've been leaning toward accepting the position based on advice from others but still on the fence. Interesting to hear differing views here.
__________________
whiskeypete is offline   Reply With Quote
Old 05-28-2015, 11:33 PM   #18
Thinks s/he gets paid by the post
38Chevy454's Avatar
 
Join Date: Sep 2013
Location: Cincinnati, OH
Posts: 1,578
I think almost all gov't hiring now starts as term and then you work into a permanent position. Also, the gov't pension is not nearly as good as used to be. Not sure of the exact rules now, but check this to know what you would get.

I assume the total salary for GS-13 you quote includes the locality increase? One thing is probably true, the gov't health ins benefits will cost less or be better than your contractor benefits. I know as a contractor emplyee myself I pay more than the fed employees do. Another assumption as a contractor employee you likely don't have any pension program. 401k match might be good or more generous than fed side.

As for the GS-13 step 1, the good part is you have 9 more steps of increase, before having to bid to a higher GS-14. Being step 1 you have better chance for raises than if you were maxed out or near the top of the steps - the way I understand it. I have worked with GS employees, so I am certainly not from personal experience.

Overall, either path can work. Stay higher paid and less job security contractor. Or switch to fed and have better security and bit lower pay. As fed you might save less in retirement savings but have that pension to offset the need for higher savings total.
__________________
After Monday & Tuesday even the calendar says, W-T-F...

Semi-Retired 7/1/16: working part-time (60%) for now [4/24/16 changed to 80%]
Retired Aug 2, 2017; age 53
38Chevy454 is offline   Reply With Quote
Old 05-29-2015, 07:43 AM   #19
Thinks s/he gets paid by the post
 
Join Date: Aug 2005
Posts: 2,056
I had always heard that the pension plan for FERS employees sucked, but upon reading it, it looks like you get 1% of your high three years, multiplied by your years of service. And if you stay past 62, it bumps to 1.1%. So if you put in 40 years and are older than 62 when you retire, you'll get 44% of your high three years.

Maybe not as good as the old CSRS system, but not as bad as I thought it was. Under CSRS, you'd top out at 80%, but had to put in something like 42 years to get to it. And you didn't get SS, which you do under FERS.
__________________
Andre1969 is offline   Reply With Quote
Old 05-29-2015, 08:19 AM   #20
Dryer sheet wannabe
 
Join Date: May 2015
Posts: 11
Quote:
Originally Posted by Andre1969 View Post
I had always heard that the pension plan for FERS employees sucked, but upon reading it, it looks like you get 1% of your high three years, multiplied by your years of service. And if you stay past 62, it bumps to 1.1%. So if you put in 40 years and are older than 62 when you retire, you'll get 44% of your high three years.

Maybe not as good as the old CSRS system, but not as bad as I thought it was. Under CSRS, you'd top out at 80%, but had to put in something like 42 years to get to it. And you didn't get SS, which you do under FERS.
Unfortunately the mandatory contribution to the FERS pension fund is now at 4.4% for new employees. I believe it was originally 0.8% which has increased in recent years. 4.4% is quite a sum when you add it up over the years. The pension plan sounds like a good deal, but as others have said, the pension has decreasing value during your retirement since it doesn't adjust for inflation. In that 15th year of retirement, that monthly retirement check won't look so great as those first few years.

Still on the fence about the job offer. I don't have a doubt you can make a decent career as a defense contractor, but I'm pretty sure that would require a lot of job hopping and brief patches of unemployment or looking for other projects within the company in order to avoid a "lack of work" (LOW) notice from your employer. Of course, ymmv... I know some people who have stuck with the same company for years doing the same job. I'm afraid that's rare in my industry.
__________________

__________________
whiskeypete is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Question about early retirement payment (Federal Government) Travis FIRE and Money 6 06-09-2010 06:55 AM
Federal Government - Early Retiree June 6 rapoole Hi, I am... 26 06-05-2008 07:57 AM
Retirement savings options for W2 contractor? brewer12345 FIRE and Money 11 03-05-2008 06:45 AM
Fair price from contractor? saluki9 Other topics 25 04-11-2007 09:39 PM
Contractor problems...what would you do? cute fuzzy bunny Other topics 17 05-23-2004 09:19 AM

 

 
All times are GMT -6. The time now is 07:26 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.