I'm about to take a new job, at a public university. It has two retirement plan options. The first is a pension, the second is an investment plan (like a 401k, but not).
Option A: I contribute 6.25% of salary. At retirement, pension formula is:
2% x Your Participating Years of Service x Your Average of the Highest Three Years of Earnings
Vests at ten years; if I leave before then I get contributions + 4% interest returned.
Option B: I contribute 5% of salary, employer contributes 9.25%. I choose investment products through TIAA-CREF (so, reasonably low-fee options are available, although it's not Vanguard).
Relevant information: my salary will start at $76000. I anticipate working for thirty or so years (like my job, not interested in early retirement). I would guess that my salary by then would be at least $125,000 (adjusted for inflation).
There are also supplemental retirement options available, both a 403b and a 457b. I can contribute to both, so I can save up to $36,000/year tax-deferred in any case.
I estimate that there is a 10% chance I won't get tenure at this job, in which case I'd leave after five years. Maybe another 20% chance that I'd take another job at some point in the next 30 years, and 70% chance that I'll stay in this job until I retire. Not a ton of mobility in my field - it took me four years to find this job, and it's a good one, so I'd only move for a spectacular offer somewhere else.
I currently max out a 403b, and my husband maxes his 401k. There is a significant chance that husband will switch jobs to an employer that does not offer a 401k in the next few years (he is in tech and is looking for a new job). He also plans to retire early when we feel that we are financially secure enough - at minimum, we'd wait for me to get tenure at this new job, which would be in 5 years. He makes approximately 150,000/year in his current job, but will probably end up taking a pay cut in order to work someplace more interesting (currently has a job offer for $100,000/year, which he will take if he can negotiate remote work; he applied for this job before I got my offer). If he takes the new job, we may not be able max our retirement accounts for a few years, because we are expecting our second child this summer and will have a daycare bill of nearly $30,000/year for the next three years. We'll get close, though.
We are both 34 years old, and have about $150,000 in savings earmarked for retirement (not including cash savings, the 529 plan or house equity). When we buy a house in this new city, we will have about $250,000 in mortgage debt. No other debt.
Anyone want to play with these numbers for me? Or offer a general opinion on the desirability of a defined benefit pension plan?