Is it worth quitting my private-sector job and taking a government job so I can invest in the 457 account, too?

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Naturally Brilliant
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Is it worth quitting my private-sector job and taking a government job so I can invest in the 457 account, too?

Post by Naturally Brilliant » Tue May 15, 2018 10:47 pm

Long story short: I have a private-sector job where I'm maxing out the HSA and 403(b). (I put in after-tax monies every year into my Roth IRA, too.)

If I leave this job for a state government job, I'll almost certainly have to take a little bit of a pay cut, but then I'll get the 457 account. And with that, I can max out both a 401k and a 457 (as well as an HSA), putting me $18.5K ahead in terms of tax-deferred investing. What do you think? Worth it or no?

PFInterest
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Re: Is it worth quitting my private-sector job and taking a government job so I can invest in the 457 account, too?

Post by PFInterest » Tue May 15, 2018 11:26 pm

the first and only question is: which job is better for you and your future plans?

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Re: Is it worth quitting my private-sector job and taking a government job so I can invest in the 457 account, too?

Post by AlohaJoe » Tue May 15, 2018 11:30 pm

Naturally Brilliant wrote:
Tue May 15, 2018 10:47 pm
If I leave this job for a state government job, I'll almost certainly have to take a little bit of a pay cut, but then I'll get the 457 account. And with that, I can max out both a 401k and a 457 (as well as an HSA), putting me $18.5K ahead in terms of tax-deferred investing. What do you think? Worth it or no?
The tax benefits of retirement accounts range between 0.7% and 2.7% a year. The exact amount depends on your tax bracket, how often you rebalance, and whether you spend from the retirement account or it simply passes on to your heirs. Would you be taking more than a 2.7% pay cut? If so, then you will likely come out behind.

prad81
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Re: Is it worth quitting my private-sector job and taking a government job so I can invest in the 457 account, too?

Post by prad81 » Wed May 16, 2018 1:20 am

Interestingly, I was similarly enticed into taking a public sector job recently (with a good pay raise too), but soon realized that it is not for me. Lack of processes, unbelievable bureaucracy, extreme politics, etc. I quit after a few months, and am now back in the private sector. I do miss the generous 457/403b/HSA benefits, but I have come to realize that they aren't more important than the actual work environment. If I were 5-10 years away from retirement, I might have continued on, but in my late 30s, I just couldn't see myself spending 20 years in such an environment.

Just my 2 cents.

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Re: Is it worth quitting my private-sector job and taking a government job so I can invest in the 457 account, too?

Post by Eagle33 » Wed May 16, 2018 1:38 am

Naturally Brilliant wrote:
Tue May 15, 2018 10:47 pm
Long story short: I have a private-sector job where I'm maxing out the HSA and 403(b). (I put in after-tax monies every year into my Roth IRA, too.)

If I leave this job for a state government job, I'll almost certainly have to take a little bit of a pay cut, but then I'll get the 457 account. And with that, I can max out both a 401k and a 457 (as well as an HSA), putting me $18.5K ahead in terms of tax-deferred investing. What do you think? Worth it or no?
It is doubtful that your current employer will let you contribute any $ into the401k plan without earning it from them.

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Re: Is it worth quitting my private-sector job and taking a government job so I can invest in the 457 account, too?

Post by jeffyscott » Wed May 16, 2018 8:13 am

prad81 wrote:
Wed May 16, 2018 1:20 am
Interestingly, I was similarly enticed into taking a public sector job recently (with a good pay raise too), but soon realized that it is not for me. Lack of processes, unbelievable bureaucracy, extreme politics, etc. I quit after a few months, and am now back in the private sector. I do miss the generous 457/403b/HSA benefits, but I have come to realize that they aren't more important than the actual work environment. If I were 5-10 years away from retirement, I might have continued on, but in my late 30s, I just couldn't see myself spending 20 years in such an environment.

Just my 2 cents.
I endured 32 years in those golden handcuffs, reasons I did not leave were the pension, work hours, and time off.

From what I know, the private sector would likely not have allowed me to work just the standard 40 hours per week, have those hours be 6:30 am - 3pm (so I was home before kids from school), or had 6-1/2 weeks per year of vacation time (that at 20 years, started with about 3 weeks), plus 9 paid holidays. I've also heard that large companies can be pretty bureaucratic and political, as well.

My retirement benefits are not as generous as some government entities, but I do get about 1/2 my nominal pay for life and probably 7-8 years of family health insurance coverage (which should be just enough to get me to 65, will have to pay for spouse's coverage for a few years as she is a few years younger).
press on, regardless - John C. Bogle

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Re: Is it worth quitting my private-sector job and taking a government job so I can invest in the 457 account, too?

Post by bh7785 » Wed May 16, 2018 9:35 am

jeffyscott wrote:
Wed May 16, 2018 8:13 am
I endured 32 years in those golden handcuffs, reasons I did not leave were the pension, work hours, and time off.

From what I know, the private sector would likely not have allowed me to work just the standard 40 hours per week, have those hours be 6:30 am - 3pm (so I was home before kids from school), or had 6-1/2 weeks per year of vacation time (that at 20 years, started with about 3 weeks), plus 9 paid holidays. I've also heard that large companies can be pretty bureaucratic and political, as well.

My retirement benefits are not as generous as some government entities, but I do get about 1/2 my nominal pay for life and probably 7-8 years of family health insurance coverage (which should be just enough to get me to 65, will have to pay for spouse's coverage for a few years as she is a few years younger).
Sounds like a pretty good gig. Was it worth it to you?

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Re: Is it worth quitting my private-sector job and taking a government job so I can invest in the 457 account, too?

Post by jeffyscott » Wed May 16, 2018 10:37 am

bh7785 wrote:
Wed May 16, 2018 9:35 am
Sounds like a pretty good gig. Was it worth it to you?
I believe it was preferable to the alternatives for me. But, of course, I did not live through the alternatives in order to be able to truly compare.

I do know of a number of people who came in from the private sector in their 50s, planning to work maybe 10-15 years or so to get a bit of a pension.
press on, regardless - John C. Bogle

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Re: Is it worth quitting my private-sector job and taking a government job so I can invest in the 457 account, too?

Post by ofcmetz » Wed May 16, 2018 11:31 am

Like jeffyscott said, there are lots of benefits to working for the government. Time off, better health plans (some that last into retirement, pension plans, and a more stable job are all probably a lot more important than having a governmental 457B plan available.

If the money is similar and the job duties are similar it's definitely worth looking into. I never had to make the decision as there is no private sector equivalent to my line of work. I will end up retiring in my 40's though which probably wouldn't have happened in the private sector.
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Re: Is it worth quitting my private-sector job and taking a government job so I can invest in the 457 account, too?

Post by LadyGeek » Wed May 16, 2018 9:15 pm

This thread is now in the Personal Finance (Not Investing) forum (career guidance).
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

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Re: Is it worth quitting my private-sector job and taking a government job so I can invest in the 457 account, too?

Post by rjbraun » Thu May 17, 2018 11:01 am

Naturally Brilliant wrote:
Tue May 15, 2018 10:47 pm
Long story short: I have a private-sector job where I'm maxing out the HSA and 403(b). (I put in after-tax monies every year into my Roth IRA, too.)

If I leave this job for a state government job, I'll almost certainly have to take a little bit of a pay cut, but then I'll get the 457 account. And with that, I can max out both a 401k and a 457 (as well as an HSA), putting me $18.5K ahead in terms of tax-deferred investing. What do you think? Worth it or no?
I thought HSAs were for people with high-deductible health insurance. Are there other circumstances where one can have an HSA? Otherwise, I would think your state government job should come with a solid health insurance plan that would have a low deductible.

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Re: Is it worth quitting my private-sector job and taking a government job so I can invest in the 457 account, too?

Post by Katietsu » Thu May 17, 2018 11:13 am

rjbraun wrote:
Thu May 17, 2018 11:01 am
Naturally Brilliant wrote:
Tue May 15, 2018 10:47 pm
Long story short: I have a private-sector job where I'm maxing out the HSA and 403(b). (I put in after-tax monies every year into my Roth IRA, too.)

If I leave this job for a state government job, I'll almost certainly have to take a little bit of a pay cut, but then I'll get the 457 account. And with that, I can max out both a 401k and a 457 (as well as an HSA), putting me $18.5K ahead in terms of tax-deferred investing. What do you think? Worth it or no?
I thought HSAs were for people with high-deductible health insurance. Are there other circumstances where one can have an HSA? Otherwise, I would think your state government job should come with a solid health insurance plan that would have a low deductible.
I know quite a few teachers and state employees that have been moved to or have selected HDHP plans in the last few years. Some are OK deals as the employer makes a decent HSA contribution. But anecdotally, the employee share of health care costs have been rising for public employees too.

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Re: Is it worth quitting my private-sector job and taking a government job so I can invest in the 457 account, too?

Post by fantasytensai » Thu May 17, 2018 11:39 am

Assuming the paycut is not too significant, and you plan on working for the next 10+ years to vest your pension, I would do it for the pension alone.

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Re: Is it worth quitting my private-sector job and taking a government job so I can invest in the 457 account, too?

Post by jeffyscott » Thu May 17, 2018 11:41 am

rjbraun wrote:
Thu May 17, 2018 11:01 am
I thought HSAs were for people with high-deductible health insurance. Are there other circumstances where one can have an HSA? Otherwise, I would think your state government job should come with a solid health insurance plan that would have a low deductible.
Well with mine, it had become a choice between low deductible and high premiums or high deductible with lower premiums. Although most have not switched over, nearly all would be better of in the HDHP. Choice for family coverage is between about $2500 per year in premiums with $250/500 deductible and various copays or HDHP at about $900 in premiums, $3000 deductible, employer puts $1500 in HSA (so really it's effectively only $1500 deductible).
press on, regardless - John C. Bogle

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Re: Is it worth quitting my private-sector job and taking a government job so I can invest in the 457 account, too?

Post by rjbraun » Thu May 17, 2018 12:17 pm

Katietsu wrote:
Thu May 17, 2018 11:13 am
rjbraun wrote:
Thu May 17, 2018 11:01 am
Naturally Brilliant wrote:
Tue May 15, 2018 10:47 pm
Long story short: I have a private-sector job where I'm maxing out the HSA and 403(b). (I put in after-tax monies every year into my Roth IRA, too.)

If I leave this job for a state government job, I'll almost certainly have to take a little bit of a pay cut, but then I'll get the 457 account. And with that, I can max out both a 401k and a 457 (as well as an HSA), putting me $18.5K ahead in terms of tax-deferred investing. What do you think? Worth it or no?
I thought HSAs were for people with high-deductible health insurance. Are there other circumstances where one can have an HSA? Otherwise, I would think your state government job should come with a solid health insurance plan that would have a low deductible.
I know quite a few teachers and state employees that have been moved to or have selected HDHP plans in the last few years. Some are OK deals as the employer makes a decent HSA contribution. But anecdotally, the employee share of health care costs have been rising for public employees too.
jeffyscott wrote:
Thu May 17, 2018 11:41 am
rjbraun wrote:
Thu May 17, 2018 11:01 am
I thought HSAs were for people with high-deductible health insurance. Are there other circumstances where one can have an HSA? Otherwise, I would think your state government job should come with a solid health insurance plan that would have a low deductible.
Well with mine, it had become a choice between low deductible and high premiums or high deductible with lower premiums. Although most have not switched over, nearly all would be better of in the HDHP. Choice for family coverage is between about $2500 per year in premiums with $250/500 deductible and various copays or HDHP at about $900 in premiums, $3000 deductible, employer puts $1500 in HSA (so really it's effectively only $1500 deductible).
Interesting. I will have to take a closer look at my situation. In the event one goes the HDHP route, is it typically better to just pay the deductible out-of-pocket, assuming one has the funds readily available? I always get the impression that people try to avoid touching HSA funds. I don't know much about HSAs, but from what I gather if you can continue to let the HSA grow (tax-free?) it would seem to make sense.

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Re: Is it worth quitting my private-sector job and taking a government job so I can invest in the 457 account, too?

Post by soccerrules » Thu May 17, 2018 12:59 pm

PFInterest wrote:
Tue May 15, 2018 11:26 pm
the first and only question is: which job is better for you and your future plans?
+1
To me there are a number of other factors that would ALSO play into the decision.
Boss ? (leaving from ? going to?)
Coworkers
Commute
Workload
Promotion potential
Income growth
How much more in my budget could I save where the pre-tax space increases it's value.

A negative for me would be taking LESS pay to make a move for financial reasons -- seems like an oxymoron.
Don't let your outflow exceed your income or your upkeep will be your downfall.

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