From reading the boards, it seems like there are good number of people who retired through gov't pension + healthcare coverage. I'm currently working in private industry as a CPA and thinking about working for the gov't lately. I'm 27 and making pretty good money right now. I think in the next 5 years, I can probably break $100k (present dollar). From looking at gov't pay, I'll probably make $100k in the next 30 yrs (present dollar) if I'm lucky and willing to play the politics. I'm thinking if it'll be worth it to work for the gov't for benefits but lower pay. Of course, there would be less work hours and less stress, which is always good.
If I stay in the private industry and making $100k, I'll always LBMM and save/invest the difference so I'm not too concerned about blowing away money. If I work for the gov't, I'm thinking either working for state/local gov't cause their pension is much better than fed or swich into medical career and go into military as an officer.
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The govt is a big, really big place. Everything from the Army to the Peace Corps. Its nice to work for an agency where you agree with its basic function. Then there are the people you work with and your personal desk assignments. It can work out fine. I have had 5 different jobs in the Federal Govt and a couple of them were good, including my current job. The benefits are good but used to be matched by those in industry. Its more a matter of civilian folks losing their pensions & benefits that makes govt work more visible. The Federal Govt no longer has the defined benefit program, they now have a 401k type account. IF you save over a long career it should work well. I know of a good number of folks who do not contribute enough to get the matching and they will work for a long, long time.
State & local are where the largest benefits are but these may be reduced in the future or at least for newer hires.
Since you are an accounting professional you could work anywhere. One place to look is IRS. Some time there would enhance your resume if you decided to go on to different work.
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“There are only two ways to live your life. One is as though nothing is a miracle. The
other is as though everything is a miracle.” - Albert Einstein
The Federal Govt no longer has the defined benifit program, they now have a 401k type account.
Actually, they have a decent defined benefit plan - 1% of salary (high 3 actually) per year worked. Add in Social Security plus the Thrift Savings Plan (401K, matched up to 5% of salary) and you are not far from the benefits of the old plan.
Other than that, I agree with Yakers about what you can expect. If you move to DC you can match that $100K in a few years without progressing to the upper management ranks. Out in the field, you coould expect to stay a little lower unless you become a manager.
The last thing I will say is that you can expect to face tough challenges and work very hard in many, if not most Fed jobs.
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Every man is, or hopes to be, an Idler. -- Samuel Johnson
Working for the gov't just for the pension probably isn't worth it. Think about this - if you make more money NOW, LBYM and save NOW, you have 30 years worth of compounding with that money.
Gov't pension is high-3 x years of service x 1%. If you stay 30 years, you get 30%. If you only stay 20 years, you only get 20%, and it's deferred until your late 50s or early 60s. If you retire before the gov't says you should, you often lose your health care benefits.
To give myself as an example. I started in the gov't out of college, 15 years ago. I plan to retire in 15 years at age 52. I'll get my pension (30% of high 3), but I can't start collecting until age 57. PLUS, I CANNOT get gov't health benefits after I am retired. That's a big factor, but one I am preparing for.
If I go even early, say with 25 years in at age 47 - I get a pension that is 25% of high 3, but not until age 60, and again, no health bennies. But, the low cost TSP funds are nice to have too...
I guess my point is that if you can make more money elsewhere a lot faster (and are a disciplined saver), it probably will offset the pension. And, you never know what life with throw at you - what if in 10 years you leave the gov't? There goes the pension idea.
Don't get me wrong, I have loved my various jobs in the gov't (and 2 agencies), I love the people I work with (and they are pretty much all hard workers), and except at project deadlines, the hours are great. There's always some politics, but don't big companies have that issue too (I don't mean dem/rep politics)?
Karen
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Two roads diverged in a wood, and I - I took the one less travelled by...
My husband works for the fed govt and I recruit CPAs for a living....
So...here are some things to consider:
1) What type of work do you prefer?
- Govt is really looking to find great folks - 50% of their employees are retirement-eligible over the next 10 years, so finding a job in the govt and having the 'upward' potential is really great. I know you said State/Local govt but job security isn't as good. Have you thought about the FBI / SEC / IRS / PCAOB? They need CPAs like crazy! Of course, culture is different. Some people are really great, but because the govt can't really fire people easily, you'll have a strong chance of working side by side with someone who really is just there to kill time and not pull their share of the work.
- Industry is good and yes, you can get to 100k when you become a controller, or if in DC, you can be a Manager for a larger organization and get 6 figures.
- Public accounting of interest? Here's where the money is. In DC, college grads are making 50k - 60k easily. A 5 yr person makes 80k and as an experienced manager, 100k. Of course if you're an auditor, you could make more.
2) Don't move to fed govt for typical benefits (I don't know enough about State / local to be honest). You're right that fed govt. isn't as great as many people think. True, the benefits of having vacation + sick + family leave + Alternate Work Arrangements + Work from home + holidays are great. But...dental benefits are the worst. Medical is not bad. Pension / retirement, like others said, isn't what it used to be. It's basically a 401k system, so not much of an upside compared to private industry.
I am on the military side. 2.5% x number of years and Tricare at retirement.
This puts me at age 43 with a 50% of my highest 3 years income in a pension that is COLA’d and very low cost health care.
The difference in the military is that you can walk at 20 and start drawing benefits immediately. For me this is perfect for ER. Add to this LBYM and contributing to the TSP and an IRA and you should be set.
Not to mention that the military tends to move you around every 3-5 years and it makes it easy to build up some real estate rental properties over the years if you don’t sell and rent them out, if that is your thing.
The drawbacks are lower pay, frequent moves, time away from family, possible war, etc.
However the medical field in the military is a good way to go. Most medical professionals with at least a MA come in as an O-3 (roughly 65k/yr with annual increases and pay raises as well as promotions every 5 years as an officer) and work in a generally non-military environment (a hospital or clinic)
I like my job, the adventure and travel, and the job security not to mention knowing that there is a defined finish line (20 years)
If you can deal with some of the militaries drawbacks, it makes for a short career and sure path to ER if you plan wisely and LBYM.
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"Those who think it cannot be done, need to stay out of the way of those of us doing it."
you don't take any work home with you. once your 40 hrs are up, you're done. you're never on call nor do you have to worry about being held late after your shift is up. if you are held, it's voluntary and you get compensated for it (i.e. overtime or comp/credit time).
Perhaps the biggest key to the federal retirement plan is the TSP, which is a 401K plan. Pump in the max every year from the beginning of your service and you'll do fairly well. You simply MUST put in at least 5%; that's instant-doubling your money. the TSP is great. very low cost index funds. i think the ER for the funds are .06%. not even vanguard can beat that! the pension is also a nice nugget that will hopefully be around for awhile.
i'm not sure if the job security is there. maybe on a state/local scale, but not on the federal side. i've seen many people in my dept. get canned.
Medical is fair, but not special, and the dental plans are an insult: such as $22 for an exam and cleaning.
you can go to the opm.gov site and check out all the bennies involved
Another potential benefit with federal employment: every 5 years or so they have an "open season" for the life insurance program. You can get into the term life insurance with no medical underwriting. This was great for me. I had testicular cancer and couldn't get any affordable life insurance. When the open season came up I signed up for 5 X annual salary coverage and carried it until both kids were through college.
I have two friends who work for the fed in DC, and both of them were originially in the private sector. Let's just say that neither has complained about the hours. They say that they are at the office for 9 hours (but they get every other Friday off), but whether they actually work their butts off is another matter.
People check in but hardly check out, working for the federal government. Workers may complain about the lower salary than that of the private sector. However, they stay for the benefits (health, pension and vacation) and less demanding tasks/responsibilities/work hours .....even though they may have to put up with the bureaucracy and lower salary.
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May we live in peace and harmony and be free from all human sufferings.
People check in but hardly check out, working for the federal government. Workers may complain about the lower salary than that of the private sector. However, they stay for the benefits (health, pension and vacation) and less demanding tasks/responsibilities/work hours .....even though they may have to put up with the bureaucracy and lower salary.
comparing gov't employees to roaches
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- Hurry! to the cliffs of insanity!
I think that we had some recent discussions on pension benefits being substantially reduced for new workers....I dont think there really is the job security that people think, either.....maybe for professionals like engineers and lawyers that probably dont get market pay.....I have seen other positions simply get axed or get hired as temps....I have seen others that are more drivers simply start their own business as a creative outlet in addition to the regular job...which I think a lot folks here consider the holy grail anyway (if you have to work).
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- Hurry! to the cliffs of insanity!
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