Do I leave my job?
Young individual, early 30s working for a municipality that offers state pension and 457 retirement plan along with health benefits, etc. Have an opportunity to work for client that is sort of a startup non-profit entity (not currently concerned about job security at this non-profit) that would not offer pension. Trying to best figure out how to calculate the best compensation package to justify leaving current position. New position would come with greater responsibilities so would definitely require a larger salary than I am paid now but it is the retirement package sacrifice that i am most concerned with -- specifically pension.
Any advice on how to best calculate compensation package? should I seek the advice of a financial advisor/planner?
stumpedMore details are needed in order for anyone here to give you advice worth a damn.
At face value as it stands, I'd stay where you are.
That answer could change substantially given more info.
Josh I would think basic math of the salary difference multiplied by the projected number of years you anticipate working as compared to the pension can spell that part out . Also if they offer any type of retirement contribution like employer matched 401k contribution.
If it is a life fulfillment thing that is a whole different decision but just for money may not be worth it.
jdem One thing to consider, by the time you are ready for that pension it may not longer be available. Laws are changing, how secure is the pension? You are quite young yet.
hktownie Roughly speaking, you would need a 60% increase in compensation to break even. This is considering that your pension will be there decades from now (likely will be converted to a defined contribution or 401k) as will be the retiree medical (probably will be discontinued).
Here is an example getting to 100k (note, no assumption is being made as to the actual work):
Public worker:
50k base salary
50k in benefits (roughly 100% of base salary)
------
100k total annual compensation
Private worker with good benefits:
80k base salary
20k benefits (roughly 25% although many at 20%)
------
100k total annual compensation
iJay Are you married? If so, what does your wife say? She is your partner, ask her. It's her life to. Ask your parents. Most of all what does your gut tell you? Are you happy in your current job? If not, your young enough to make the change. Don't stay just for the security. That will effect you physically and mentally if you are unhappy, and always wondering what if. Do what's best for yourself and your family (if you have one). Don't be afraid to take risks, life is to short. Good luck in whatever your choose.
auntiel Start Ups are great. Its exciting. Its new. Its fresh. However, no guarantee. In the late 1990's and early 2000's there was the New York New Media Association. It was new and exciting and fresh. Its where Doubleclick and About were born. Plus tons of others. I had tons of interviews in NYC. They are all gone. About is the only one left. Everyone's hopes and dreams were created on a cocktail napkin at the Four Seasons in mid town and they are all gone. For every Mark Cuban and Daniel Snyder there are countless failures.
I wanted to be part of that scene so bad. It was exciting. It was new. They are all gone.
Early 30's turns into early 40's in a blink of an eyelash. Then you are 50. Its amazing how fast time passes by.
I would stay with the secure thing. However, I would also see if you have other interests. Maybe its Real Estate. Maybe its taxes. Maybe its going to estate sales and making purchases and selling on ebay. If you have the money maybe you buy a two family home and be a landlord.
You can go with your heart but think with your brain. I've been there. I would love to be with a start up and do what I want. But it was just not in the cards.
I wish you all the best and please use your head. Take care and good luck.
Singlemaleinnj Make sure you are vested in your state pension... Money talks is the bottom line...I would absolutely consult a financial planner n get some advice...
Mr. Tone Tough decision stumped, and it seems, from your post, that your prime variable is financial. I would advise that you also consider how you want to spend the next forty years. Life offers no guarantees, but at your age one typically feels that they will have all the time in the world. Forty years, eight hours a day (at least) - that's a lot of your lifetime - how do you want to be engaged, what would be most satisfying, have the most chance for happiness, achievement, growth, etc. Even at present, if something is not guaranteed up front, (retirement package) perhaps that would be a goal over the next few years - to obtain a retirement package. I had a very different experience from that described by singlemaleinnj, I took great risks - stepped way outside the box of my family's and friends' experiences, moved, and worked toward an uncertain goal. I now have a job that I love, with great flexibility, independence, and the opportunity to engage in activities that are varied and extremely satisfying, every day, yes, every day. Would never have had the life I do if I had not "held my breath and jumped." It's all about how much uncertainty you can tolerate and what your prime needs/goals are - everyone's answer will be different. Best of luck, you are in "interesting" times.
pmnsk You have to live with the decision, so you need to make it. Of course if there is a spouse then you are a team and should make the decision together or have a "sign-off" from the spouse to do what you like.
The job market still stinks. So going to a start up from a secure state job is risky. The financial discussions above are great , but you must consider that about 50% of start up fails. With that said think about job hunting in a year or two and can you live without a salary for a period of time.
Bill A good friend left a moderate paying job to work for two "friends" who were starting a business in the same field he was in at almost triple the salary. He was also made an officer of the company. Things went well for several years, and then everything fell apart. His partners took off and disappeared. This was in the 70's so it was easier to do that. He was left holding the bag. He lost everything and almost went to jail. His partners were not paying taxes for the entire time they had the business. When they saw the IRS getting close, they took off. My friend was not aware of any of this and thankfully one of the agents believed him and did not criminally prosecute him. But as an officer ( the only one they could find) he was held financially responsible and lost everything he had. My advice would be IF you decide to make the move, be sure to stay involved in the inner workings of the company. Insist on being involved as a requisite of accepting the position. You can make a lot of money starting on the ground floor of a company, and there is also the opposite end.
Tanya No pension is secure, even from the state. Best to figure out how to control your own financial security. That means funding a combination of 401K, IRA, and investment real estate while you are young.
In our case we figured it would take the net income from 4-7 properties to fund retirement for my husband and myself. So we threw every bit of money we could into buying and renovating these properties, making Uncle Sam our partner (with depreciation, etc.). It allowed us to retire early and not rely on any external agency such as a pension or Soc Sec.
You will have many job opportunities as you go forward and its best not to let a possible future pension hold you hostage.
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pj I'm not concerned about the job security at this point ("startup" is probably the wrong word to use). It's a long-standing non-profit entity previously run by volunteers that is now hiring employees. I guess what I am looking for is assistance with comparing total compensation package. The new position would come with greater responsibilities so there's no doubt that I'd want an increase to my base salary. However, what I want to do is ensure that the retirement package is comparable. Since I currently get a 457 & pension, and the non-profit would not be able to offer a pension, how do I determine what combination of base salary + retirement package would be at a minimum comparable to what I get now. My point is that I don't want to take on the new position if I'm going to be potentially short-changing myself in the long-term. The analysis iJay offered is sort of what I'm looking for. Any recommendation on a financial planner / advisor that might be able to assist with coming to these theoretical conclusions?
Here is some information we need to know:
How long have you been working at your current job?
How long until you are fully vested in the pension plan (i.e. how many years do you need to work before you are eligible to collect)?
What are the specifics of your pension payout (i.e. is it a % of last year of salary, something different)?
And don't just focus on the potential about 'losing' a pension by sticking with your current job. How about the potential of greatly increasing your earnings by taking the new position?
D-ManPV I would say a month of salary for every year that you have worked in the current job.
So let say you have worked 8 years and made $5k/month.
That would be 8 months of salary.
You should make $40k in compesation, that could be a combination of signing bonus, stock options.
BrownEyesGuy D-ManPV:
At the current job for a little over 10 years.
Need to work another ~25 years before I can collect. I believe my monthly maximum allowance would be approx 45% of my total salary based on the last 3 years of working.
I am focusing on both the loss of pension AND the potential for increased earnings. But that's exactly what I'm trying to figure out. What base "increase" in earnings do I accept to make up for the loss in pension?
BEG:
Interesting, how did you come up with those calculations? No stock options in a non-profit.
stumped - If you do leave, do you get to take anything from the pension, possibly money that you have added into the pot(without any company match)? Do you know what your full contribution has been over the 10 years?
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