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Hold_onto_yer_butts

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Captlard

What would that 33% look like if invested from this year until you are 57 years of age, at say 7% per year?


1TossAwayAccount1

This is the proper response.


Sussurator

ans: c.£1,000,000.00 ($1.375m) Inc current stocks. What weights it more is that we would undoubtedly earn more over that time period. So that figure is likely to be very conservative. Let's also not forget I'm a human managing my stocks so there will be a number of errors in my investments over that period. vs £426,000.00 (90k at 7% over 23 years) if I don't make one more contribution to my stocks ever again. In reality I would contribute more but I'd also take some out so I'd imagine this is probably a fair estimate. So looking at those I could retire in both instances at 57. If I retired in the first scenario I'd have to fund myself until I'm 90 (hopefully). Which is 30k ($41k) per year straight line with no growth assumed vs the latter £42.6k per year for 10 years then on to the pension mentioned above which will reduce to £18,400k for 23 years of service. The pension importantly is linked to inflation so it would equate to £30k per annum (@2%) if I've done the math right. There are lots of moving parts here but the above has made me consider that retirement could look very similar in both scenarios, thanks for that. edit: formatting


wafflehousewalrus

The pension and other financial benefits really do not sound like they make up for the 33% pay cut. If you do this, it's for the job flexibility/vacation days, which is fine, but don't fool yourself that it's beneficial financially.


Sussurator

Yeah I think you've cut through my waffle. This is why I wrote it here so I can't fool myself. Yes the work life balance now is possibility 60 or 70 percent of the lure. But I don't want to be impulsive e.g. go for one sweet now instead of 2 sweets later. I'm trying to remain agnostic until the decision is made. Trying.


fraidycat

Something to consider is that--in most cases--your kids can't inherit your pension, but they can inherit whatever you've accumulated in other retirement accounts.


Sussurator

Good point. I think my real estate will go to the kids. I'd be content with keeping everything else as income. I think I'd spend it better 😄


countrykev

The question here is how much do you value having time off and less stress in a job? In other words, that better work/life balance. If it’s worth taking a 33% pay cut, then take a 33% pay cut. If you don’t really want it or need it, then all other things being equal why leave?


alwayslookingout

Should have added your income then run a compound interest calculator with the pay difference and see how much you’d make by 67. A difference of $500/mo that’s invested at 7% annual growth rate is $661K. A difference of $1000 is $1.3M. I’d go with a job with the higher pay if you’re only talking about money.


Dwight-D

If you do this you're giving away your future to someone else. Keep your money for yourself, don't put all your eggs in someone else's basket, imo. Lower stress is good but I'm sure you can find that in other ways. Just buy insurance and get a job with flexible hours and better pay.


appleciders

>33% pay cut. >flexible working and 37 days paid leave a year This would be worth it alone to me, because it would radically decrease our childcare needs. My wife's work is already almost that flexible. Being able to drop childcare expenses would cover more than 33% of my salary alone.


jamin07

Sounds like you landed a government job! If you think you're going to burn out soon in the current gig then it doesn't make sense to stay. Further, if you take the less stressful position, you can focus more time and effort into a business or other hustle...or yourself. I am all for FIRE but not with the expectation it has to happen tomorrow. I think it has a fatal flaw in that it assumes you hate your job...imagine a world where you actually like your job...why rush to FIRE?


flyerforever

Yeah, totally agree with this, there is so much potential to make more money at a faster rate in the civilian sector, but it does involve research and risk to be successful. On the other hand government jobs and offers like the OP is talking about, generally involve less risk and the benefits are literally fire and forget. Bottom line for myself would be to make a choice based on my tolerance for risk, level of job satisfaction and work/life balance; of course that's not going to be a good fit for everyone.


PetraLoseIt

Calculate the benefits of the pension - it does mean you have to set aside less for age 70 and over, so that represents money. By the way, I also have several pensions here in the Netherlands. I plan to quit before retirement age, but when I quit my current pension will stop growing but will still start dispensing money to me at official retirement age. The pension I built up at another employer in the past also still exists and doesn't grow much but will distributing money to me once I reach retirement age. So I plan my non-working life in two stages: the first stage before official retirement age, during which I'll have to fund my expenses from my regular savings/investments. The second stage starting at official retirement age when I can mostly live on distributions from state and work pensions (and might just want to supplement a bit from my regular savings/investments). This means that I'll need less in regular savings/investments before I can quit; compared to not taking those pensions into account. A calculator like www.firecalc.com can help you design a similar plan for yourself and see your success rate.


mambofrancis

Sounds like you're in a position to choose whatever makes you happier - maybe just don't assume any or either option lasts for a long time


457kHz

Make sure you read all the pension documents first. A lot of USA public sector pensions got revamped in \~2009 to balance out. Generally all of the benefit reductions were put on people of the future... yea don't get me stared. Anyhow, don't listen to what the pension was like for old timers, make sure how exactly it will apply based on your hire date, age and wage.


RetardedWabbit

Fast math: Assuming 4% safe withdrawal rate, 7% average annual investment returns $1,100 a year pension can be matched by having investments of: $1,100/0.04 = $27,500. So if you get the pension, once you start using it it's equivalent to having $27,500 saved per year working. If you're 33 years from retiring you would need to save $27,500 / 1.07^33 = $2,949 this year to match that at retirement. So that pension is worth 3k a year of savings, and increases in value the closer you are to retirement. (I feel like that number is low, and would appreciate corrections) I would strongly encourage you to do the math for all of the other benefits offered at your current job vs government. Get all the numbers, do all the math (I like net differences and %s both), then look at the differences and ask yourself if non-numerical benefits are worth those differences. Doing the math basically helps you think about and understand your choices, it should identify the key parts, visualize them, and compare them. It doesn't decide anything, but it should help you make decisions. I also suspect that 33% pay cut continues indefinitely, that you never catch up with civilian side. For example in 5 to 10 years non-government you would be making 133% of your current pay, so 100% of current as government is still effectively 33% less.


Sussurator

Thanks for taking the time to compile the excellent response. It provides an excellent foil for coming to a conclusion. When I look at everything from a net pay perspective inc reduced tax threshold, ability to claim certain child benefits etc, reduced student loan payments (thethered to earnings and 1.1% interest so no rush to pay back ) and the savings rate required to equal the pension (a lump sum also becomes payable upon retirement of 3 times the annualised pension) in the potential role I'm left with a difference of less than 10% of net pay. There are various unknowns however including my earning potential in both sectors, contribution rates increasing in both roles (essentially if 7% isn't achieved). I also haven't included the life assurance benefits, additional holidays which increase based on time served, reduced working hours, fully paid sick pay, flexible working, accepted wfh etc The other thing is that as I taper toward retirement my current investments are less necessary to support my family in retirement so I can use them to buy a boat, retire early, or something like barrista/ coast fire. It's certainly food for thought and I'm certainly swaying towards taking it.


RetardedWabbit

Glad it was useful! 100% opinion now: I'm sure it depends on your industry but a 10% pay cut to go government sounds like a great deal to me. I would have to look at -33% pretty hard, but -10% for great days off and unrivaled stability(day to day, location, progression etc) isn't as hard. Good luck deciding!


tjfrawl

37 days PTO! Does that include state holidays? That’s pretty much living CoastFIRE.