Reader Case Study- Best Path to FIRE

[StacheDreamer]

Hi guys,

This is i my first time posting so I hope I am doing this correctly.  My question is more of a what would you do type question but if you need more specifics than I provide please do not hesitate to ask.  I recently received a job offer in the private sector but I am currently a public sector employee.   I am looking for input in what path you would choose if you were placed in my present situation.

Details about me:

   -30 yrs old, female, single

   -Work for state government, making 58K gross per year.

    No Debt

   -10K Emer fund
   - 8K 457b
   -6 yrs into state pension fund (Pension will pay 75% of salary at 60 yrs of age with 30 yrs of service.. so I can work 30 years (till age 54) and then collect at age 60)

*  So here is the problem our state pension is NOT safely funded.  Our legislature is already discussing bills to change the retirement structure and I am concerned about the changes to come.  They are looking at going to a 401 K type retirement with a match which would be no problem for me accept we DO NOT contribute to Social Security AND do to Government Offset Pension/Windfall Elimination Rules even if I carry a second job paying into Social Security I would not actually be able to collect the benefit. 

I was recently offered a position with a private company but the base pay is less than what I currently make (45K) with opportunites for both bonus and company stock options as well.

If I were going to make the move to the private sector I need to make that move sooner than later.  The opportunites to promote with this private company are there as it is a national company with many human resources staff members.

I guess my question is with FIRE in mind is it better to move to the private sector with the promotional opportunites it affords and give up the chance at the pension or stay with the state government and hope that I will continue to get merit increases and the pension survives 25 more years.  I am so confused right now I want make the best decision I can for my future.

Thanks for any ideas, input, facepunches you guys may provide.

[StacheDreamer]

Um did I do something wrong or is my situation just such a cluster that there is no good choice?

[Future Lazy]

Follow whichever job you think you will enjoy the most. Be frugal and save on your own - even if you kept the state job and the pension funding was stable, it's not usually advised to rely on that...

If it were my life, I would take the private sector job, be as frugal as I could and save as much as I could, get raises and try to FIRE much earlier than 54. :) Relying on a pension forces you to work even if you want to quit.

[MDM]

Not that there is no good choice, just that the choice involves a great many considerations.  Perhaps the most significant, as KaylaEM mentions, is what do you want to do?

You could put together a spreadsheet analyzing the two options, make some assumptions on career progression, legislative actions, etc., and determine which looks better.  If you do so, pay attention to the part of your brain whispering "I hope option ______ comes out ahead."  Then if the numbers are at all close, go with _______.

Good luck.

[ShoulderThingThatGoesUp]

I think that public employees are going to see serious cuts in upcoming years because governments will be paying so much to their retired employees. I'd go private sector but ask for a higher salary.

[StacheDreamer]

Thanks for all the comments guys.  I appreciate any and ALL thoughts on this.

I am very concerned about the pension surviving even if it does I am fearful it will not be enough.  Salaries for my state are terrible and make it really hard to save outside of the 8.5% they take for the pension but I am determined to save 15K this year.  I am putting 10K in the 457 plan and 5K in a roth plan I started this year.

I am not really leaning one way or the other.  See this is not what I envisioned myself doing in my life but a set of circumstances lead me here so I am really just trying to find the best Financial path for the future.

* I am using the journal to track my progress and wrote an introduction for myself detailing how I got to this place with the meager savings I have.  If anyone thinks a little more personal background will help it is there.

Thanks again everyone.

[Future Lazy]

I am not really leaning one way or the other.  See this is not what I envisioned myself doing in my life but a set of circumstances lead me here so I am really just trying to find the best Financial path for the future.

That paints your quandary in a new light, then, more like... "Which meh job should I choose to grind away at for 20-30 years until I can scrape together enough to grasp the freedom to engage with the world on my own terms?" Pension completely aside there.

Maybe the answer is to keep the job you have and keep searching diligently for something that doesn't make you "Meh..."

[StacheDreamer]

I am not really leaning one way or the other.  See this is not what I envisioned myself doing in my life but a set of circumstances lead me here so I am really just trying to find the best Financial path for the future.

That paints your quandary in a new light, then, more like... "Which meh job should I choose to grind away at for 20-30 years until I can scrape together enough to grasp the freedom to engage with the world on my own terms?" Pension completely aside there.

Maybe the answer is to keep the job you have and keep searching diligently for something that doesn't make you "Meh..."

You are right.  I had a plan for my life but life had other plans.  The dream I had before is no longer my dream.  I guess right now while I am looking for that dream I am just trying to protect my financial future as much as I can.

[Future Lazy]

I am not really leaning one way or the other.  See this is not what I envisioned myself doing in my life but a set of circumstances lead me here so I am really just trying to find the best Financial path for the future.

That paints your quandary in a new light, then, more like... "Which meh job should I choose to grind away at for 20-30 years until I can scrape together enough to grasp the freedom to engage with the world on my own terms?" Pension completely aside there.

Maybe the answer is to keep the job you have and keep searching diligently for something that doesn't make you "Meh..."

You are right.  I had a plan for my life but life had other plans.  The dream I had before is no longer my dream.  I guess right now while I am looking for that dream I am just trying to protect my financial future as much as I can.

Assuming you won't be looking for that dream forever, right? If so, ignore the pension all together. It's not relevant if you're planning for a change, right? Taking the meh job with the pension for 24 more years, or spending 2-3 years there while focusing on finding that thing which is anything but meh.

Focus on what you can do in that short term - be frugal and save independently. Build up some eff you money. :) You can do it.

[mozar]

Why such a huge cut? Why do they think you would leave 58k and a pension for 45k? Such a big cut would set you back years. Is your state job in danger of being cut? Are they cutting the pension for current employees or for new employees? Surely you can find a job with at least the same base. Usually private offers more than public because of making up for the pension. It's better to sock away as much as possible sooner than take a huge cut and hope that they give you a promotion. I think the private company is trying to take advantage of you.

[Josiecat]

No way would I go from $58K to $45K.  I would keep looking to find something in private sector that pays MORE.  Keep looking.

[TexasStash]

It's been mentioned a little bit before this, but if you do decide to go with the private sector job, you should ask for way more than 45k. You have the leverage... you have a higher paying job with more security. If they've offered, they must want you. Make them work a little for it.

Given what you've said, since the private job isn't a dream job, I'm in the "stay with the public job for now, but make it a priority to figure out what you really want to do and apply for that job within the next 2-3 years" camp.