Should I Stay or Should I Go – 6-7 Reasons to Keep Your Federal Job
Federal Jobs and the Pros & Cons of Leaving or Staying
Recently I was questioned as to the pros and cons of someone staying at their Federal job. The main reason presented for leaving was a higher wage elsewhere, outside of federal service. While initially this can seem attractive, the higher wage may not have the higher benefits associated with private industry positions. In the end quality of life may win out, whether that be inside or outside the fed, depending on your circumstances. Let’s examine some of these federal benefits and compare them with a potential private industry position.
Why Fed Job Is Attractive
PENSION
Let’s face it, most folks do not, I repeat, do not have a pension nowadays. Pensions have gone by the way side. Often when I ask others if they have a pension they will say “yes, I have a 401k” which is obviously not a pension. It is a retirement savings account.
With your federal job you in fact do have a pension, although it may be modest by some standards. Nonetheless, it is at least 1% of your high 3 average salary for every year of service to the government. I would also point out that if you were hired before 2013, your pension comes with a modest price tag. In fact, your entire benefits package is a meager .8% of your pay, less than 1%.
In conclusion, rejoice that you have a pension, and especially if you were hired before 2013.
THRIFT SAVINGS PLAN
Perhaps the new non federal position you’re considering comes with a 401k, and possibly it matches more than 5% of your pay. Nonetheless, we should point out that the TSP is a very very low cost and efficient simply way to grow your retirement savings, in addition to your pension. It presents a straightforward way of investing, just 5 major funds. For growth most select the C Fund (the SP500 fund) and perhaps the S Fund (the US Complete Stock Market Index, excluding the SP500, think small and mid cap). For safety most use the G Fund.
Make sure that the new job offer privately matches at least 5% at 100% dollar for dollar, to match what the TSP provides. Or the new employer has a seriously attractive stock option plan where they may allow you to purchase at dep discounts along the path of this new career outside of the fed.
PAID HOLIDAYS/ANNUAL LEAVE
If we are being honest, there are a number of paid days off that many private industry employees do not receive. No we are not talking about the 6 major holidays, but the other special Mondays and June 19th. There is MLK Day in Jan, Presidents Day in Feb, Juneteenth, Indigenous Peoples’ Day/Columbus Day in Oct, and finally Veterans Day Nov 11th. Now you might not think that’s a big benefit, but it is 5 additional paid days off, that often are matched with an Annual Leave (vacation day) to make a long weekend long enough even for a trip.
We must address in nearly the same breath that once a federal employee reaches 15 years of service (oh and by the way, even if you have not bought back your active duty military time, they will still credit this into your service, unless you are retired military) they earn one paid day of vacation or Annual Leave for every 2 weeks or pay period of employment. That is over 5 weeks of paid vacation annually, excluding the extra 5 days mentioned in the previous paragraph. That is 6 weeks of paid vacation. The only ones I know of that earn that much vacation time are some Europeans, so congratulations!
When accessing this new private job, make sure they have a healthy paid vacation pkg., because your Federal job does for sure!
FEHB HEALTH INSURANCE
Most privately held jobs that federal professionals are considering come with a health insurance that may be fully or at least partially paid for by your employer. The difference is that when retiring, typically that shared cost the employer pays for may be forfeited. More often than not the health insurance from a private company cancels when you resign or retire. If you plan to retire before age 65 (the first opportunity to get Medicare Part B) than your FEHB Fed Employee Health Insurance is often a real plus. It is true the government only pays 2/3 of the premium, and 1/3 you as the employee pay, which can be sizeable these days, but again it does carry on into retirement until your death if you so choose.
You can keep your federal FEHB for life, and the premiums do not increase with age. This is generally not the case with privately held positions of employment. What’s more is that the FEHB if kept into retirement allows you to decline Medicare Part B if you choose to forego this benefit, and it’s premium. That’s right, you are reading this correctly, you may decline Medicare Part B but only if you keep paying for your FEHB, and again costs for FEHB stay the same in retirement.
REGULAR INFLATION INCREASES & PAY & STEP INCREASES – COLAs IN RETIREMENT
You have regular inflationary pay increases as a federal employee. Perhaps this is because there are about 2 million active federal employees, so your voice often gets heard. Also consider that if you are a GS employee you get automatic step increases of 3% at regular intervals until you reach step 10. All be it it takes 20 years to get thru all 10 steps, but it does build momentum I assure you.
Let’s not forget when you retire, your pension will increase as well. The FERS retirees Cost-of-Living-Adjustments are based on the CPI-W and if it is less than 2%, you will get that entire increase in your pension check. If it runs higher than 3%, they subtract -1%, but you will receive these regular increases annually when retired, averaging roughly 2%.
OTHER BENEFITS AND IN CONCLUSION
Of course there’s Sick Leave and Basic FEGLI group life insurance that certainly are beneficial, and FSA and other benefits. We can not mention them all, but know this, if you are considering leaving your federal position for private industry, examine everything. Make your decision knowing all the facts, as an informed decision is no doubt a more wise one.
Happy Hunting!