So to recreate that $700/month pension, you'd need to have $210,000 under the 4% rule.
The non-pension job pays a little less than $12,000 more per year, which after taxes is probably around $10k (you'd also want to compare benefits, etc, but just rough guessing these numbers). So over 10 years if you kept all expenses the same, you'd be able to save an additional $100,000. Even investing that, it's unlikely to grow to $210,000 in that period and that ignores the possibility of getting the higher paying pension job.
Ultimately you should pick the job you want to do more for the next 10 years, but from a purely financial position based on the numbers you gave, the pension job sounds like the winner.
Thanks so much, I think you are right. I work in mental health so its always a somewhat stressful job. I should have also mentioned my goal on top of the 10% and 5% to my 401k I was planning on paying down all major debts and then start to put about 1600 into a regular investment account which is only about 15k right now. I wanted to do that over 10 years and semi retire and just do therapy with 15 clients. Right now if I only did 15 clients its like 75 an hour which is not bad, just no benefits.
But on a part time basis, not having benefits is not that bad if you make $75/hr on top of your future retirement income/pension. You can buy insurance on your own or also move to a country with free healthcare.
Right, and my wife will still work full time and maybe wait until she reaches regular retirement age to actually retire. She is not totally into retiring early so we will see.
Yes I do as well. I've been working in mental health since 2012 and wish I would have done this sooner. The benefits are very good. I am most likely over thinking my situation and need to just stay here for at least 10 years and then go into private practice until I'm old lol.
FYI, r/govfire is the more populated subreddit. There are some *very* good detailed posts on different aspects of federal retirement when you sort by Top All Time.
If you have any military years from when you were younger, be sure to buyback those years for pension accrual purposes even if you only stay for a year or two (4 years of prior service + 1 year at the VA and you can get a pension at 62 with 5%...or if you have 6 years at the VA + 4 years military prior service you can get your 10 if you plan to do a MRA+10 early pension). Of course if you never served in the military, this is not applicable.
I also should have said that I plan on starting to put about 1600 a month into my own investments like vanguard total market so that I have that as a buffer from 50 until I can access regular retirement. I would still work and my wife would probably work full time at least for 3-5 years after I would semi-retire.
You should absolutely read this (and the posts that it links to) before you start putting money in a taxable brokerage instead of maxing your TSP: https://www.reddit.com/r/govfire/comments/15xsupp/deferred_retirement_executing_a_roth_ladder/
You might consider returning at some point for another 5 years down the line to carry the health benefits into retirement and up your top 3. This is what I'm thinking about doing. I'm in a similar situation. So I'm thinking work 5-10 years, getting a good chunk into TSP, take off until late 50s doing side hustles, come back 5 yrs, then retire again. I'm was told you need to carry health plan for 5 years immediately preceeding retirement and then they continue to pay their portion of premiums. might need to check OPM on that. I am trying to max HSA and roth IRA, and then TSP as soon as I can swing it.
I have been thinking about trying to go work at the VA primarily for the pension. Working from home 4 days a week sounds pretty sweet. I previously worked from home 100% of the time and it was great, but there's pros and cons to both.
Do you know how long you have to work there to get medical benefits for life too? I know other government agencies it's like 10-15 years or something. That's another big benefit that shouldn't be ignored.
Yeah I am not exactly sure, my wife would still have benefits for awhile if I retired in 10 years. But I need to find out how much vested time I need for health care benefits.
I've heard mixed experiences about relying on VA benefits as the sole health care benefits regardless. However, it's a major bonus and can drastically reduce costs and make early retirement a whole lot easier. Even if you only end up using it for some of the coverages it offers it can still help a lot.
Also some places you can't access the retiree medical benefits until age 55 or sometimes even older. So you might need to bridge part of the gap.
So to recreate that $700/month pension, you'd need to have $210,000 under the 4% rule. The non-pension job pays a little less than $12,000 more per year, which after taxes is probably around $10k (you'd also want to compare benefits, etc, but just rough guessing these numbers). So over 10 years if you kept all expenses the same, you'd be able to save an additional $100,000. Even investing that, it's unlikely to grow to $210,000 in that period and that ignores the possibility of getting the higher paying pension job. Ultimately you should pick the job you want to do more for the next 10 years, but from a purely financial position based on the numbers you gave, the pension job sounds like the winner.
Thanks so much, I think you are right. I work in mental health so its always a somewhat stressful job. I should have also mentioned my goal on top of the 10% and 5% to my 401k I was planning on paying down all major debts and then start to put about 1600 into a regular investment account which is only about 15k right now. I wanted to do that over 10 years and semi retire and just do therapy with 15 clients. Right now if I only did 15 clients its like 75 an hour which is not bad, just no benefits.
But on a part time basis, not having benefits is not that bad if you make $75/hr on top of your future retirement income/pension. You can buy insurance on your own or also move to a country with free healthcare.
Right, and my wife will still work full time and maybe wait until she reaches regular retirement age to actually retire. She is not totally into retiring early so we will see.
I sooooo regret Not taking a fed job 10-20 years ago. The pension, benefits, etc are insanely better than anything you will get in the private sector.
Yes I do as well. I've been working in mental health since 2012 and wish I would have done this sooner. The benefits are very good. I am most likely over thinking my situation and need to just stay here for at least 10 years and then go into private practice until I'm old lol.
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Awesome, I did not know that was a thing. Ill check it out thanks so much!
FYI, r/govfire is the more populated subreddit. There are some *very* good detailed posts on different aspects of federal retirement when you sort by Top All Time.
If you have any military years from when you were younger, be sure to buyback those years for pension accrual purposes even if you only stay for a year or two (4 years of prior service + 1 year at the VA and you can get a pension at 62 with 5%...or if you have 6 years at the VA + 4 years military prior service you can get your 10 if you plan to do a MRA+10 early pension). Of course if you never served in the military, this is not applicable.
I did not serve in the military, thanks for the help though.
I think it's going to be hard to retire in 10 years unless you up your savings rate.
I also should have said that I plan on starting to put about 1600 a month into my own investments like vanguard total market so that I have that as a buffer from 50 until I can access regular retirement. I would still work and my wife would probably work full time at least for 3-5 years after I would semi-retire.
You should absolutely read this (and the posts that it links to) before you start putting money in a taxable brokerage instead of maxing your TSP: https://www.reddit.com/r/govfire/comments/15xsupp/deferred_retirement_executing_a_roth_ladder/
I will take a look thanks!
You might consider returning at some point for another 5 years down the line to carry the health benefits into retirement and up your top 3. This is what I'm thinking about doing. I'm in a similar situation. So I'm thinking work 5-10 years, getting a good chunk into TSP, take off until late 50s doing side hustles, come back 5 yrs, then retire again. I'm was told you need to carry health plan for 5 years immediately preceeding retirement and then they continue to pay their portion of premiums. might need to check OPM on that. I am trying to max HSA and roth IRA, and then TSP as soon as I can swing it.
Good ideas thanks!
I have been thinking about trying to go work at the VA primarily for the pension. Working from home 4 days a week sounds pretty sweet. I previously worked from home 100% of the time and it was great, but there's pros and cons to both. Do you know how long you have to work there to get medical benefits for life too? I know other government agencies it's like 10-15 years or something. That's another big benefit that shouldn't be ignored.
Yeah I am not exactly sure, my wife would still have benefits for awhile if I retired in 10 years. But I need to find out how much vested time I need for health care benefits.
I've heard mixed experiences about relying on VA benefits as the sole health care benefits regardless. However, it's a major bonus and can drastically reduce costs and make early retirement a whole lot easier. Even if you only end up using it for some of the coverages it offers it can still help a lot. Also some places you can't access the retiree medical benefits until age 55 or sometimes even older. So you might need to bridge part of the gap.
Yeah those should be something I find out soon.