Which situation would you rather have to facilitate FIRE...

[wildcat]

I thought this would be interesting to see what the forum says. Your intuition and subsequent vote could be based on hindsight (those ER'd looking back) or foresight ( those Young Dreamers looking forward).

I also ask because my dad announced his plans to retire at the end of this year at the age of 56 and after 30+ years with the Fed govt. He made it to a G-14 status and could have been promoted to G-15 if he would have been willing to transfer to D.C. He was horrible with his money and never saved much up until the past 6-7 years via the TSP. Needless to say he would have never been able to retire wihtout his pension. I can only imagine what his situation would be like today if he saved regularly throughout the years.

 

[REWahoo]

I choose "c": None of the above.

 

[wildcat]

How many more options could you get out of that?

 

[laurence]

In a perfect world, you have forsight right in your early 20's and begin saving for retirement, so in effect you can have a small business on the side as a financial planner for one client. That's why I chose A, since health benefits and pension take a lot of variables out of the equation.

 

[haha]

In a perfect world, you have forsight right in your early 20's and begin saving for retirement, so in effect you can have a small business on the side as a financial planner for one client.  That's why I chose A, since health benefits and pension take a lot of variables out  of the equation.

Negatives to government work (does not apply to military!):

1) Unless you are doing something where you might be valuable as a lobbyist or some revolving door type thing, your skills may not be worth much in the faster moving private sector.

2) Possibly annoying co-workers/bosses who are well insulated from being fired.

3) Possibly boring or unchallenging work (again, does not apply to military.)

Positives to government work: Everything else.

As I think about it more, I think I have the perfect plan. Find a docile woman and tell her you will marry her if she gets a good government job. This will be a good test of her love for you; and it will supply you with all the advantages of government work with none of the drawbacks. You may have to keep the house cleaner than you otherwise would prefer doing, and of course any sexual lagniappes will likely be chosen from her menu. But still, all and all not a bad bargain as these things go.

Ha

 

[astromeria]

During her first year in grad school in DC, my daughter and her roommates rented a small condo. Most of the building's owner-residents were retired govt workers who couldn't understand why these young women were going into debt and working so hard instead of getting ordinary govt jobs, enjoying a pleasant career, followed by early retirement with generous pension and insurance. hmmm.

 

[audreyh1]

Actually, I went to work in private sector (very SMALL company), moderate pay, little pension/benefits, no retirement health care benefits, but STOCK OPTIONS which turned out well.

Different scenario than the above two choices IMO.

Health benefits in retirement are really nice (so is a solid pension), but I'm glad I had stock options instead.

Audrey

 

[REWahoo]

How many more options could you get out of that?

Audrey just cited one excellent alternative, working for a small company with stock options that actually pay off. Another is working for a small to mid-size company which may not offer stock opprtunities, but offers above average bonus/profit sharing payouts. Iin my case, it was a little of both.

Of course the best alternative is to be a Gabe and inherit your way to a comfortable retirement. But while we all play the reproductive lottery, there are darn few of those winning tickets.

 

[audreyh1]

Another option is starting your own business. A lot of wealthy people made their wealth this way. It doesn't have to involve the public markets. If successful, your business can be profitable and you capture some of the excess cash flow and/or sell the business for a good deal of money.

Audrey

 

[Kwirk]

I agree with audreyh1 and REWahoo! that there are other options that should be considered. The small company option particularly appeals to my (very small) gambling spirit.

I chose A almost 23 years ago (after I realized that I had already accumulated 5 years of federal time during training). It looked like the safest route to a decent income and an acceptably early retirement. So far everything has gone largely as expected but I often wonder what might have happened if I had taken a more risky path. The unsatisfied curiosity about 'what might have been' is a hidden cost of taking the safe road. Laurence could add that to his list of negatives.

 

[maddythebeagle]

I think you are assuming too much for young folks going into government. Some of the states are going to have problems with unfunded pension promises just like the private sector. You might argue that they can raise taxes but I think the more realistic option is to cut back on benefits of the next generation.

 

[lazygood4nothinbum]

of those choices i'd work for the post office, not the ballistic one, rather the one with the shorts and matching short sleeved shirt, strolling through the neighborhood all day delivering mail.

i worked for a high profile corporation with lots of government contracts. they had to be very careful about who they fired. it was not unheard of having bad employees promoted into someone else's area.

if hindsight is criteria i'd need a whole other catagory from which to choose. had i known i'd come into money mid-so-called-career, maybe i wouldn't have done government or corporate. maybe i would have just shoveled sh*t at the local zoo. i'm still considering it.

 

[astromeria]

We also went the small-company-with-stock-options route--several times, and that also panned out for my husband and me  (to some extent--enough to provide comfort but not real wealth). BUT...most of our friends who did the same did not do as well (and of course, a few did better). Something like 10% of those 90s high-tech startups ever went public, and only ~10% of those had a stock price shoot up high enough to pay off decently--and then you had to time your vesting schedule and sales right, which wasn't easy and most people got it wrong. Not to mention that those of us on the lower rungs didn't get a lot of stock options anyway--I only got 5000 shares at hire (for which I paid a nickel apiece--those who started just a few months later had to pay a buck). And while you waited for your ship to come in, you often got cr@ppy benefits like no 401k match or even no 401k, often worse health insurance and less company subsidy for it, no pay for education and other benefits associated with larger companies, and while staffing was ramping up you were desperately overworked. And then the layoffs started...

=astro, richer but grayer

 

[REWahoo]

... had i known i'd come into money mid-so-called-career, maybe i wouldn't have done government or corporate. maybe i would have just shoveled sh*t at the local zoo. i'm still considering it.

Wait, don't tell me: You joined the forum to get first-hand knowledge of what it would be like to actually work in your fantasy career field.

 

[tryan]

I dismiss the assumption ... starting a business is always an option and should be part of the poll.

This poll is like voting republican/democrat today (little difference).  

Need a 3rd option.

 

[audreyh1]

That's true with the stock options:

- you have to be one of the early employees to be granted enough stock options to really matter.

- you will probably have to put up with fewer benefits - at least at first while the company is small.

- your company has to be successful.  From what I hear only 10% of startups actually are.  This is the biggest risk.

- you have to time you sale of the stock options right.  Definitely tricky.  Lots of tricky tax issues too.

- you may have to let the company stock be a very high % of your net worth for a long period of time.  Every accountant/financial advisor in the book will tell you not to do this - not to have all your eggs in one basket (the company you are working for) but instead diversify.  But it is precisely this concentration risk that can have the biggest payoff for FIRE.

Audrey

 

[lazygood4nothinbum]

Wait, don't tell me: You joined the forum to get first-hand knowledge of what it would be like to actually work in your fantasy career field. 

very funny. you know you gotta work your way up to washing the elephants. now that i'll be doing volunteer work, i'm 49 and starting at the bottom.

 

[tryan]

- your company has to be successful. From what I hear only 10% of startups actually are. This is the biggest risk.

This has not played out well for 2 friends. Each has changed jobs about every 2 years looking for the next microsoft/google/yahoo .... Funny thing, once they see how scewed-up the management is they abandon ship.

It's one thing to have a great idea; marketing and managing the idea/people is quite another.

 

[audreyh1]

Yes I can easily see how "chasing" start-ups could be really frustrating and usually fail. Kind of like chasing stock market performance.

Audrey

 

[astromeria]

- you may have to let the company stock be a very high % of your net worth for a long period of time.  ...But it is precisely this concentration risk that can have the biggest payoff for FIRE.
Audrey

I started to follow your advice, but luckily abandoned it. But my friends who held long got shafted in Y2K/2001. Those who exercised but didn;t sell got creamed by AMT on phantom profits. I almost held too long myself--missed the peak when, for just a minute or two, our stock traded at $80, then quickly plummeted to $30. I changed my tune on the next upswing, selling blocks at $50, $60, and $70, while most employees (even execs) waited to hit the magic $80 jackpot again. It never happened. In fact, it went down into the single digits and then split--in the wrong direction!--5 for 1 and dropped to the low single digits again. I recently sold my last hunk o' stock for ~$1000 on a major rise (over 3 bucks--woohoo!).

 

[Rustic23]

The main advantage, at least in the past, to the Gov. job is ‘Job Security’. I have several friends that working in both. In the private sector, they have had to spend a rather large portion of what they were savings for retirement to get them through periods of unemployment brought on the business cycles. The Government workers, on the other hand, work for less pay but have been able to keep their retirement savings intact. I have worked in both. I don’t believe you could characterize either as always dull, boring, exciting, or anything else. The government job was an IT manager. Very quick paced and constantly changing. The private sector was working for a bank, slow and predictable. IMO it is the type of job that defines it’s characteristics. In government you tend to grow rich slowly. I the private sector, you have the potential to grow rich quickly.

 

[audreyh1]

I started to follow your advice, but luckily abandoned it. But my friends who held long got shafted in Y2K/2001. Those who exercised but didn;t sell got creamed by AMT on phantom profits. I almost held too long myself--missed the peak when, for just a minute or two, our stock traded at $80, then quickly plummeted to $30. I changed my tune on the next upswing, selling blocks at $50, $60, and $70, while most employees (even execs) waited to hit the magic $80 jackpot again. It never happened. In fact, it went down into the single digits and then split--in the wrong direction!--5 for 1 and dropped to the low single digits again. I recently sold my last hunk o' stock for ~$1000 on a major rise (over 3 bucks--woohoo!).

Yep - it can be pretty tricky. In 1999+ things went really haywire. I held company stock as most of my net worth for over 10 years, but I started averaging out well before 1999 when I projected to RE. In other words it wasn't during the "dot com era". I had a "ladder" where I kept selling chunks.

Luckily my company never cratered. It wasn't one of the super high-fliers of the dot com era (much to the dire disappointment many of the shareholders), but it didn't crash and burn either. It's been cut in half several times over the past decade - but it recovers back to old highs within a year or two.

No question I was lucky....

Audrey

 

[astromeria]

I worked at ordinary software companies, not dotcoms, although my last company overlapped the "dotcom era," and my previous company overlapped the "Microsoft swallows the world era," which was just as devastating in its own way. One of my husband's companies was dotcom-related, though not a dotcom itself. My husband dates back to the punch card era, followed by VAX and UNIX. We bought a Mac as a home computer when the Mac Plus came out (86?). At work, I arrived in time for the late-DOS/early Windows era--I documented products running on Windows v1 and was a Beta tester for NT--and we each got to work on an interesting Mac project along the way.

It's satisfying to look back, but I sure am glad it's in the past! I don't have the energy for the long hours or recycled business BS, or sufficient enthusiasm over constantly changing technology any more. The hubster does, though--he has a blast in academia now. Better him than me 

 

[wildcat]

Pretty good answers - A is still leading B as of now.  A couple of thoughts:

A small-medium sized employer could be added as a third option and probably should have been.

Finding a small company to work for and one that will provide you with a considerable amount of stock options could happen but on average I believe it is unlikely.

We all know that most businesses fail and require a lot of time.  I suppose I could have added it as an option.  I was thinking more along the lines of what is most probable, not what is your fantasy/dream situation which I am sure is all to be self-employed millionaires.

Maddy could have a point about future benefits but I think some states will be better off than others.

 

[audreyh1]

That's kind of the point though.  It's the much less likely scenarios that have the big potential payoffs.  If someone really wants to create wealth in a shorter amount of time than average, it makes sense to aggressively pursue these options.  You do have some control of the outcome.  You can use your hard work and wits to significantly increase the chances of success.  And the younger you are when you pursue this path, the more time you have to get through a few failures.

Audrey