Private Sector Job or Stay with State Job

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UpstateNYer
Posts: 4
Joined: Sun Dec 30, 2012 4:01 pm

Private Sector Job or Stay with State Job

Post by UpstateNYer » Wed Apr 17, 2019 8:29 pm

Hello Bogleheads…

I have followed this site for a while and have been very impressed with the knowledge and experience of the members. Now I have a career opportunity that I am hoping to get your feedback/advice on. This is also my first post -- or at least the first one I recall I have made. Thank you for taking the time to read through this. Here are the details:

Situation: I currently work for company A, a State agency, and have been there for about 3 years. Previous employment has been in the private sector. I am a VP in the company collecting a respectable salary. There is a 401k with a 3% match. There is also a pension that will vest when I hit 60. Collecting the pension at 60 will result in an annual amount of approximately $30k-$35K. Wait until 63 and the amount rises to approximately $50K.

I have been offered a position with a Fortune 500 company, Company B, to be President of one of its affiliates. The base pay will increase less than 10% however I will be eligible for short term incentive (target 30%) and a long term incentive plan (3 year maturity, expect about $25k in stock). There is no pension. Considering all compensation, the position with Company B has an NPV about $100K higher than staying with Company A. (Calculated based on a expiration date at 85 years old, retirement date of 60 years old, and 5% discount rate).

The Company B position presents a new opportunity to build up this affiliate (its new) and manage a P&L. The experience presents some unique growth opportunities and the company is well respected. On the down side, the concern is the work/life balance. The offer includes only 3 weeks vacation and less holidays (I have 4 weeks now which can be rolled over and there is flexibility to take "comp" days). Offered vacation is only 3 weeks and I would be expected to be available even on vacation. There will be other challenges as one would expect but the work/life balance is one important to me.

At Company A I have been able to build up a successful, respected unit within the company. The work/life balance is challenged at times (yes, believe it or not -- long hours at times and weekend attention to emails/texts/calls) but becoming more manageable. My departure would be devastating (the words of my boss) which I don't take lightly. This being said, the culture at Company A does not fit my personality. In my role, I effect change and it often feels like I am rowing upstream to accomplish my goals. It is very frustrating and my wife, who has never opined on any employment situation I have been in, offered unsolicited that I need to quit due to my frustration/unhappiness I have exhibited. Personally I like the work but not performing the work in the culture of Company A. If I stay with Company A, staying 6 more years for the pension may be difficult -- but doable and I would have a pension in the end.

My question for those who may have been in this situation or seen others in this situation -- how much value do I put on the pension? One side of me includes it since an annuity in retirement would be comforting and I do like to de-risk my life. On the other side, I joined Company A never intending to stay 10 years so it would be appropriate leaving it out of consideration (note that if I did leave it out of consideration, the NPV spread would be over $400K in favor of the Company B).

How would you evaluate this opportunity?

As background, I am 53 and my wife is 53. She is employed and is vested in a state pension which will yield about $20-25k at age 62. Today our retirement holdings are about $1.4M. Only significant debt is our mortgage which we will now focus on reducing as our kids education is taken care of -- this will be eliminated by age 60.

This has been a long post and I thank you for persevering through. I appreciate any insight, recommendation, or advice you can offer.

rgs92
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Joined: Mon Mar 02, 2009 8:00 pm

Re: Private Sector Job or Stay with State Job

Post by rgs92 » Wed Apr 17, 2019 8:52 pm

Stay with the State job. Gov't jobs are pretty much always much better. Private sector jobs are stressful and insecure. Getting a gov't job is precious opportunity that should not be taken for granted. You can usually only get one if you have connections because there is so much competition for them.

A gov't job is like being in a private club with very exclusive membership. And if you are new in a corporate job you may be treated badly. And when you are older, you are a target for being let go, and you feel it every day. (There are many threads here about this, like the recent one about being prepared for involuntary retirement a 50.)

A private sector career often ends early and at 53 you will find getting a new job almost impossible unless you have rare niche skills.

A gov't job is like a prize these days when private sector corporate employment can be so awful that all you think about is FIRE from day 1.

Topic Author
UpstateNYer
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Joined: Sun Dec 30, 2012 4:01 pm

Re: Private Sector Job or Stay with State Job

Post by UpstateNYer » Wed Apr 17, 2019 9:12 pm

Thanks RGS. Yes, job security is better with the State job. Just to add some more color, the jobs are in the energy/utility sector. They don't have the volatility that other private sectors have but there is some nonetheless. This all being said, I am not too concerned about security because the skills I possess are unique and in demand. I am very confident I could find a position with another private sector company or consultant if needed. But you raise a good point.

rgs92
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Re: Private Sector Job or Stay with State Job

Post by rgs92 » Wed Apr 17, 2019 9:19 pm

OK, good luck. Yep, if you are confident that your skills are in demand, then it could be a new beginning for you and a nice challenge.
Best to you sir.

carolinaman
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Location: North Carolina

Re: Private Sector Job or Stay with State Job

Post by carolinaman » Thu Apr 18, 2019 7:41 am

I can relate to your situation. I came to local govt from the private sector when I was in mid 40s. I was criticized by my first boss because I approached things with a "private sector mentality". I took it as a compliment and tried to keep that approach for the 22 years I was there. I was head of a large IT organization and it was more like a private sector IT group. We went from 50 employees to about 150 in 15 years. The growth enabled me to hire managers and staff who bought into my approach. However, we ran into the bureaucracy often, especially with depts we provided services to. You have to learn what you can do and what you cannot do and accept that or you will get pretty frustrated. It takes a different mindset but you do not have to capitulate to the bureaucracy. I was fortunate to have bosses who appreciated and supported me. However, I dealt a lot with state agencies and I think I would have been a lot more frustrated in anyone of them. They were much more bureaucratic.

The private sector opportunity you describe sounds very promising. It is a classic risk reward situation. Much greater rewards but greater risk too. You are at the age where finding another job becomes more challenging. However, in a senior position like you describe, it is probably much more common to hire people in their 50s.

Once I got about 10 years into my govt job (in mid 50s) I knew staying until retirement was the logical thing for me to do. Your situation is different though. You have only 3 years with your current job and have a great offer for another job that promises better compensation and also seems to offer a better work culture and job satisfaction. That would tip the scales for me to take the new job, but obviously this is your decision to make. Best wishes.

Topic Author
UpstateNYer
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Joined: Sun Dec 30, 2012 4:01 pm

Re: Private Sector Job or Stay with State Job

Post by UpstateNYer » Thu Apr 18, 2019 1:01 pm

Thanks Carolinaman. It is nice to hear someone who has walked in similar shoes.

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Sandtrap
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Re: Private Sector Job or Stay with State Job

Post by Sandtrap » Thu Apr 18, 2019 1:46 pm

A
State
10-40 years from now you won't regret it.
The payoff is long term.
Wiki Bogleheads Wiki: Everything You Need to Know

retire2022
Posts: 801
Joined: Tue Oct 02, 2018 6:10 pm
Location: NYC

Re: Private Sector Job or Stay with State Job

Post by retire2022 » Thu Apr 18, 2019 6:48 pm

UpstateNYer wrote:
Wed Apr 17, 2019 8:29 pm

Situation: I currently work for company A, a State agency, and have been there for about 3 years. Previous employment has been in the private sector. I am a VP in the company collecting a respectable salary. There is a 401k with a 3% match. There is also a pension that will vest when I hit 60. Collecting the pension at 60 will result in an annual amount of approximately $30k-$35K. Wait until 63 and the amount rises to approximately $50K.
https://www.osc.state.ny.us/retire/empl ... r_faqs.php

Are you Tier 6? if so you will get reduced benefits, one needs minimum 5 years to be vested, but you really need at least 20 years(53+20=73) to make any meaningful payout in pension, 3 years time vested really don't do anything. What is most important for you and your spouse is the medical plan. One needs 1500 hours of sick time if you are a (assuming you are PEF member or CSEA) or 15 years of sick time for your medical premiums to be paid for. Your spouse will thank you for sacrifice.

edit: check out chart: https://www.osc.state.ny.us/retire/empl ... arison.php
UpstateNYer wrote:
Wed Apr 17, 2019 8:29 pm

As background, I am 53 and my wife is 53. She is employed and is vested in a state pension which will yield about $20-25k at age 62. Today our retirement holdings are about $1.4M. Only significant debt is our mortgage which we will now focus on reducing as our kids education is taken care of -- this will be eliminated by age 60.
This is a magnificent accomplishment. During Governor David Paterson, 2010 he tried to lay off the state workforce, it never happen, state job pension is heavily regulated and well managed. The job is very secure, we have an 85 year old and a 76 year still on the job.

Your wife will appreciate your health benefit and job security I'm tier 4 and PEF and I plan to retire end of this year.

Do you have a 457b plan? I've been in it for the last 29 years:

https://www.nysdcp.com/iApp/tcm/nysdcp/index.jsp

good luck

wilson08
Posts: 394
Joined: Wed Apr 02, 2008 2:37 pm

Re: Private Sector Job or Stay with State Job

Post by wilson08 » Thu Apr 18, 2019 9:13 pm

I have known people to leave the state for a higher paying job
and were laid off or dissatisfied within a year. I know a smaller
number of cases of people who left the state to start their own
companies or be major players in a company and have done very
well. I come down on the side of staying with the state:
Generally more holidays
Generous vacation time depending on the number of years of service
Much less likelihood of being laid off
Pensions (in some cases) vs 401K
State is not going out of business or relocate to another part of the country
Civil service protection
Lots of job variety in some state jobs (e.g. engineering)
Lateral transfers between agencies or bureaus within agencies
Very seldom required to work uncompensated overtime

Topic Author
UpstateNYer
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Joined: Sun Dec 30, 2012 4:01 pm

Re: Private Sector Job or Stay with State Job

Post by UpstateNYer » Fri Apr 19, 2019 7:02 pm

Thanks Sandtrap and Wilson...leaving behind a pension and retiree medical is difficult. I am leaning in that direction.

Congrats retire2022 and thank you! Yes, I am Tier 6. While I am not in PEF or CSEA, my agency does have a medical benefit for retirees. Vesting is 10 years. Best wishes for a long, healthy retirement!

Sandi_k
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Location: SF Bay Area

Re: Private Sector Job or Stay with State Job

Post by Sandi_k » Sat Apr 27, 2019 2:09 pm

If you were younger, and had a longer term for aggressive savings from the private job income, I'd say go.

At age 53, I'd say stay. Age discrimination in the private sector is rampant, and when the next recession hits, higher-paid management is where many of the first cuts fall.

The pension is a beautiful thing in terms of longevity insurance, and the survivor's benefit for your wife (who is actuarily likely to outlive you by ~8 years) is a huge plus.

retire2022
Posts: 801
Joined: Tue Oct 02, 2018 6:10 pm
Location: NYC

Re: Private Sector Job or Stay with State Job

Post by retire2022 » Fri May 03, 2019 8:21 pm

UpstateNYer wrote:
Fri Apr 19, 2019 7:02 pm
Thanks Sandtrap and Wilson...leaving behind a pension and retiree medical is difficult. I am leaning in that direction.

Congrats retire2022 and thank you! Yes, I am Tier 6. While I am not in PEF or CSEA, my agency does have a medical benefit for retirees. Vesting is 10 years. Best wishes for a long, healthy retirement!
Upstater, do you have local time with city, town, village, county or an Authority or Public Benefit Corporation?
Do you have volunteer time (fire department with town) with any agency as stated before?

Do you have military Veteran ie Persian Gulf Veteran time? Were you a College Work Study student?

any of these situations if you can prove it with pay stub or Office of Retirement have any records can shorten your time in fact if you have any of those times you can go to the earlier Pension Tier.

I know someone who worked in the state during the mid 70's (Tier 1) and left came back worked in NYC (Tier 4) and had their pension Tier 1 reinstated and NYC time added. The only issue is you have to buy back time during the period you were out of the Tier.

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prudent
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Re: Private Sector Job or Stay with State Job

Post by prudent » Fri May 03, 2019 8:35 pm

Topic moved to Personal Consumer Issues.

rjbraun
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Re: Private Sector Job or Stay with State Job

Post by rjbraun » Fri May 03, 2019 9:45 pm

If OP's spouse is already vested and can receive retiree health insurance benefits, including for OP, as spouse, that would help to reduce OP's retirement risk. OP may want to check whether retiree insurance will terminate in the event spouse predeceases OP.

Also, as OP notes that Company A can be very frustrating environment to work, that can take a personal toll. If OP elects to stay at Company A it might be worthwhile to try to find ways to minimize any associated stress, health effects, etc. that may arise.

Defined benefit pension and 401-k with a 3% match. Sounds pretty generous (assuming that's 3% of annual salary).

No advice on which Company to go with, but good luck with the decision. Both sound like good opportunities!

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