Author Topic: Raise v. Vacation Time (Read 8579 times)

dude · « **on:** February 16, 2016, 07:16:18 AM »

So for the past 4-5 years, I was maxed out at my pay grade and therefore not eligible for an annual performance raise (called a "Quality Step Increase" in govspeak), so instead, I was given an extra week of vacation as a performance award. Because I am in the senior earning category for vacation time, the additional week resulted in just over 6 weeks of vacation time annually for those years. Man, I got pretty used to that, as I LOVE to take vacations! But last year, the pay grade for my position was fortuitously elevated to the next higher grade, so this year, assuming I'm in line for a performance award (which I fully expect), I am now eligible for a Quality Step Increase, which amounts to precisely $4,284/year. I found myself thinking about it, and because I have several vacations planned this year, I was pretty sure I was going to forego the raise and take the usual extra week of vacation instead, figuring that the raise would only be about $3k after deductions.

But then I put on my economics/MMM hat and started crunching the numbers. First off, the pay raise would increase my High-3 for purposes of calculating my pension benefit. Not by a lot, but by enough to matter -- $132/mo., or $1,584 annually. In turn, this would lessen the withdrawal burden on my 401k in retirement by the same amount, which effectively means that I could leave $1,584/yr invested and earning let's say 6%. Over a 30-year retirement period, that amounts to $132,742. In addition, the $3k or so raise for the next 3 years (until retirement), invested at 6%, and allowed to grow an additional 30 years, would be $58,124. So the total, by my math, is $190,866 foregone if I choose the one extra week of vacation over the pay raise.

Does this sound right? Assuming it is, it's a pretty obvious choice, isn't it? It's not like I'm working an extra year, I'm simply taking 5 weeks of vacation this year instead of 6. Would anybody choose the vacation over the raise? (to be clear, I don't "need" the extra money, as my numbers are solid whether I take this raise or not, but it certainly adds a nice buffer at a pretty insignificant cost, IMHO).

2Cent · « **Reply #1 on:** February 16, 2016, 07:32:30 AM »

Why not take both. Can't you take unpaid leave?

I'm a red panda · « **Reply #2 on:** February 16, 2016, 07:35:51 AM »

I'd take the money if you are serious about early retirement.

If you're more of a cushy-normal retirement kind of saver, take the vacation now. (Assuming you work somewhere that really lets you take all your days!)

frugalnacho · « **Reply #3 on:** February 16, 2016, 07:40:17 AM »

If the choice was between 0 and 1, or even 1 and 2 I would vote vacation. But dude, you already are taking 5 weeks of vacation. That's more than most people get. It's more than I get. It's probably more than I will ever get until I FIRE. I say take the raise and enjoy your 5 weeks of vacations.

dude · « **Reply #4 on:** February 16, 2016, 07:51:02 AM »

Quote from: 2Cent on February 16, 2016, 07:32:30 AM

Why not take both. Can't you take unpaid leave?

Nope, can't easily take unpaid leave -- pretty much requires an Act of God.

zephyr911 · « **Reply #5 on:** February 16, 2016, 07:53:33 AM »

Do you need the extra money for FIRE? For most of us, saving as much as possible is priority one, right up to the point where we buck the herd and recognize "enough", and additional dollars become nearly meaningless. And unless you're looking to push your FIRE date forward as quickly as possible, the extra savings are probably just added safety margin on top of a complete plan.

I'm a fed myself and I'm planning on retiring so far ahead of the normal FERS age that my hi-3 doesn't really matter, nor is it likely that I will work long enough for the compounding of today's savings to be a major issue. As a step 5, I won't have this dilemma anytime soon, but if I did, I'd take the time-off award. Still, it's all about what makes the most sense for you.

redcedar · « **Reply #6 on:** February 16, 2016, 07:59:06 AM »

Pay raise has perpetual benefits as well, right? If a raise is % based, future raises may be higher. If your employer provides any benefits that are based on pay, they will grow over time. If you change jobs in the future, you may base your asking salary on your current salary.

Also, was they extra week vacation negotiated annually? If not, can it be considered that it was granted permanently?

dude · « **Reply #7 on:** February 16, 2016, 08:02:11 AM »

Quote from: zephyr911 on February 16, 2016, 07:53:33 AM

Do you need the extra money for FIRE? For most of us, saving as much as possible is priority one, right up to the point where we buck the herd and recognize "enough", and additional dollars become nearly meaningless. And unless you're looking to push your FIRE date forward as quickly as possible, the extra savings are probably just added safety margin on top of a complete plan.

I'm a fed myself and I'm planning on retiring so far ahead of the normal FERS age that my hi-3 doesn't really matter, nor is it likely that I will work long enough for the compounding of today's savings to be a major issue. As a ste 5, I won't have this dilemma anytime soon, but if I did, I'd take the time-off award. Still, it's all about what makes the most sense for you.

No, I don't need then money. But the cost of that extra buffer -- one measly week of vacation -- seems like a pretty solid bargain.

thd7t · « **Reply #8 on:** February 16, 2016, 08:04:35 AM »

If you're making enough money, the vacation sounds wonderful! It's like a little bit of retirement, right now!

RysChristensen · « **Reply #9 on:** February 16, 2016, 08:07:10 AM »

Quote from: frugalnacho on February 16, 2016, 07:40:17 AM

If the choice was between 0 and 1, or even 1 and 2 I would vote vacation. But dude, you already are taking 5 weeks of vacation. That's more than most people get. It's more than I get. It's probably more than I will ever get until I FIRE. I say take the raise and enjoy your 5 weeks of vacations.

I just got a little lightheaded reading this. I'm plainly doing life ALL WRONG. 5 weeks. WEEKS. I got 2 DAYS off last year. Including weekends. (My boss sucks. I am my boss. Yes indeed. Unless you count the pesky clients who actually rule the schedule. Say no enough times and you risk them going away to someone who says yes. Then you have lots of free time and no money...). I think I need smelling salts. Take the money!

dude · « **Reply #10 on:** February 16, 2016, 08:09:30 AM »

Quote from: Redcedar on February 16, 2016, 07:59:06 AM

Pay raise has perpetual benefits as well, right? If a raise is % based, future raises may be higher. If your employer provides any benefits that are based on pay, they will grow over time. If you change jobs in the future, you may base your asking salary on your current salary.

Also, was they extra week vacation negotiated annually? If not, can it be considered that it was granted permanently?

To the first question, yes. So in truth, the numbers will likely be higher; for example, the POTUS has proposed a 1.7% increase for 2017. And obviously, 1.7% of the larger number is a larger number (an increase of $2,621 vs. $2,549). And of course every increase after that, assuming there are any.

To the second question, no, definitely not. This is a one-time, end of the performance rating period, discretionary award granted by my supervisor; it just so happens he's given it to me annually for the past 4-5 years.

Kenbo · « **Reply #11 on:** February 16, 2016, 08:09:42 AM »

Sounds like you can't go wrong either way. The money is just gravy for your retirement or you can get an extra week of vacation now. Sounds like you're in a strong position either way. Kind of user preference in this case.

dude · « **Reply #12 on:** February 16, 2016, 08:13:28 AM »

Quote from: RysChristensen on February 16, 2016, 08:07:10 AM

Quote from: frugalnacho on February 16, 2016, 07:40:17 AM
If the choice was between 0 and 1, or even 1 and 2 I would vote vacation. But dude, you already are taking 5 weeks of vacation. That's more than most people get. It's more than I get. It's probably more than I will ever get until I FIRE. I say take the raise and enjoy your 5 weeks of vacations.

I just got a little lightheaded reading this. I'm plainly doing life ALL WRONG. 5 weeks. WEEKS. I got 2 DAYS off last year. Including weekends. (My boss sucks. I am my boss. Yes indeed. Unless you count the pesky clients who actually rule the schedule. Say no enough times and you risk them going away to someone who says yes. Then you have lots of free time and no money...). I think I need smelling salts. Take the money!

haha! To be sure, I am an insanely fortunate person getting paid far more than I think I'm worth (yeah, that old "imposter syndrome" again), and the vacation time is a huge benefit that I don't take lightly. I was pretty sure I was going to take the vacation over the raise when I first thought about it, but when I see the numbers in front of my face, it's hard for me to justify that choice rationally. So the money is the way I'm likely going to go.

zephyr911 · « **Reply #13 on:** February 16, 2016, 08:15:18 AM »

Dude, how much longer are you planning on working for? Just curious. It would affect both sides of the calculation for me.

dude · « **Reply #14 on:** February 16, 2016, 08:28:02 AM »

Quote from: zephyr911 on February 16, 2016, 08:15:18 AM

Dude, how much longer are you planning on working for? Just curious. It would affect both sides of the calculation for me.

Retirement eligible in just over 3 years (May 2019). Very likely to go on that date, but there's a chance I stick it out until the end of that year (Dec 2019).

Drifterrider · « **Reply #15 on:** February 16, 2016, 08:49:22 AM »

Quote from: dude on February 16, 2016, 07:16:18 AM

Would anybody choose the vacation over the raise? (to be clear, I don't "need" the extra money, as my numbers are solid whether I take this raise or not, but it certainly adds a nice buffer at a pretty insignificant cost, IMHO).

Are you mixing the QSI for a bonus? A bonus does not figure into your retirement, a step increase does. If offered a step increase I'd go for it every time because it "pays out" every year.

Vilgan · « **Reply #16 on:** February 16, 2016, 11:20:58 AM »

Can you even turn down a step increase? Doing so seems crazy.

There's nothing to say your supervisor can't just give you the 1 week anyway. My wife is in a similar situation: A bit over 5 weeks off and she usually gets another week or so off with various discretionary awards because she works hard and goes above and beyond rather than just checking in for 30 years like many of her coworkers. She is NOT maxed out and gets the step increases each year (every 2 years now) in addition to the discretionary awards.

I think the bigger question is the retirement date: May 2019 with a lower high 3 or stick it out to Dec 31 for a better high 3. Giving up a week now might make leaving in May more doable which works out to -1 week now (if you really do lose the discretionary award) to get many weeks back in 2019.

zephyr911 · « **Reply #17 on:** February 16, 2016, 11:25:24 AM »

Quote from: dude on February 16, 2016, 08:28:02 AM

Retirement eligible in just over 3 years (May 2019). Very likely to go on that date, but there's a chance I stick it out until the end of that year (Dec 2019).

Yeah, if the date is important and the 'Stache size (including NPV of higher Hi-3) affects that, then the extra 15 days of leave over 3 years may not be worth it.

I'm holding out for an ANG retirement at 44 but I only plan to do about 5 as a GS, so I don't get into these calculations much. My near-term income is drill pay and real estate (mostly reinvesting my own portfolio) and the pensions should be immaterial by the time I actually get them.

Guses · « **Reply #18 on:** February 16, 2016, 02:00:42 PM »

So the question is:

4k$ per year in perpetuity as long as you work + the pension benefits related to the 4$K vs 1 week in vacation time this one time?!

Ya, the pay is much better than the 1 week.

dude · « **Reply #19 on:** February 17, 2016, 07:34:50 AM »

Quote from: Drifterrider on February 16, 2016, 08:49:22 AM

Quote from: dude on February 16, 2016, 07:16:18 AM
Would anybody choose the vacation over the raise? (to be clear, I don't "need" the extra money, as my numbers are solid whether I take this raise or not, but it certainly adds a nice buffer at a pretty insignificant cost, IMHO).

Are you mixing the QSI for a bonus? A bonus does not figure into your retirement, a step increase does. If offered a step increase I'd go for it every time because it "pays out" every year.

Drifterrider -- I'm talking QSI ("the gift that keeps on giving").

I'm a red panda · « **Reply #20 on:** February 17, 2016, 08:02:06 AM »

Quote from: Guses on February 16, 2016, 02:00:42 PM

So the question is:

4k$ per year in perpetuity as long as you work + the pension benefits related to the 4$K vs 1 week in vacation time this one time?!

Ya, the pay is much better than the 1 week.

I was working under the assumption that the added vacation would be a permanent addition to the vacation accrual. But when put that way- yeah, go for the raise.

Shor · « **Reply #21 on:** February 17, 2016, 10:47:42 AM »

Quote from: iowajes on February 17, 2016, 08:02:06 AM

Quote from: Guses on February 16, 2016, 02:00:42 PM
So the question is:

4k$ per year in perpetuity as long as you work + the pension benefits related to the 4$K vs 1 week in vacation time this one time?!

Ya, the pay is much better than the 1 week.

I was working under the assumption that the added vacation would be a permanent addition to the vacation accrual. But when put that way- yeah, go for the raise.

Not to mention, after he gets the raise, or the next couple raises, he will hit the same "issue" where his compensation can no longer increase and he can only take extra vacation, except now he also gets paid more for that same vacation time.

zephyr911 · « **Reply #22 on:** February 17, 2016, 10:56:41 AM »

Quote from: dude on February 17, 2016, 07:34:50 AM

Drifterrider -- I'm talking QSI ("the gift that keeps on giving").

Hey, my boss put me in for a QSI about a year after I hit step 4, so I'm a 5 now. He says I will still get an automatic step 2 years after my last automatic step.

Do you know anything about this?

Vilgan · « **Reply #23 on:** February 17, 2016, 03:30:06 PM »

Quote from: zephyr911 on February 17, 2016, 10:56:41 AM

Quote from: dude on February 17, 2016, 07:34:50 AM
Drifterrider -- I'm talking QSI ("the gift that keeps on giving").

Hey, my boss put me in for a QSI about a year after I hit step 4, so I'm a 5 now. He says I will still get an automatic step 2 years after my last automatic step.

Do you know anything about this?

https://www.opm.gov/policy-data-oversight/pay-leave/pay-administration/fact-sheets/within-grade-increases/

Playing with Fire UK · « **Reply #24 on:** February 18, 2016, 06:43:48 AM »

Another point is whether your workload changes if you opt for extra vacation time? My old place reduced/increased our targets when we bought or sold days of vacation, so it was worth it to buy vacation days. My current place gives you the same amount of work regardless, and you generally end up working a huge amount the weeks before and after a vacation so I sell vacation days and take the money.

BFGirl · « **Reply #25 on:** February 18, 2016, 08:35:03 AM »

I'd go for the money. A little extra padding in the pension would be worth it for me. Fellow gov't attorney here.

zephyr911 · « **Reply #26 on:** March 03, 2016, 11:06:08 AM »

Quote from: Vilgan on February 17, 2016, 03:30:06 PM

https://www.opm.gov/policy-data-oversight/pay-leave/pay-administration/fact-sheets/within-grade-increases/

Oh, I found this in the Q&A, and thanks:

Quote

A QSI does not affect the timing of an employee's next regular WGI unless the QSI places the employee in step 4 or step 7 of his or her grade.

Being a 5, I'm not subject to that exception, so I'm 6 months from another raise. WOOT! #stache

Daisy · « **Reply #27 on:** March 04, 2016, 10:05:27 PM »

I would try to keep the extra week off AND get the increase...but I am greedy in that way. Tell your boss that you have gotten used to this extra week off.

I also get 6 weeks of PTO and use every hour of it. We have a use it or lose it policy. I can't imagine going back to 4 or 5 weeks off...quite the golden handcuffs to stay at my position.

5 extra days could also mean 5 extra 3 day weekends.

But you only have 3 years left so if you can't get both I guess the money may be better. If you had more time left to work I'd go for the extra week of PTO.

RobFIRE · « **Reply #28 on:** March 05, 2016, 03:55:44 AM »

So if you're saying it's $4.5k gross/$3k net versus 1 week of holiday, and you don't strictly need either, then I'd look at it this way: what is your salary per week now? If you earn say $2k per week now then I would take the pay increase: it's double pay for a week.

News:

Author Topic: Raise v. Vacation Time (Read 8579 times)