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Old 05-29-2014, 08:27 PM
 
5,635 posts, read 13,971,828 times
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Hey guys,
Currently I'm a contractor with a security clearance and have had opportunities to crossover to the fed side. In my case, is it really worth it to jump to the fed side or should I stay contractor for the next 25+ years?

I know job stability as a contractor is always a topic of concern, but lets put that aside for now.

I am 33 years old and currently make 100k/year. The benefits (e.g. life/disability insurance, tuition reimbursement, etc) are similar to federal civilians except for 2 main items:

1.) Healthcare is paid for my by employer and not deducted from my salary (I pay typical copays, but that is reimbursed up to 1k/year with a HRA debit card from employer)

2.) And the biggie...employer contributes 18% of my salary every year to a Vanguard SEP-IRA. This is NOT taken from my salary, it's on top of it.

On the federal civilian side, that salary is not very common within my agency. Even so, health insurance and retirement contributions are taken from fed civilian paychecks. I do know that civvies get a retirement annuity as well as medical insurance in retirement, something that is not available for me as a career contractor. However, due to my high salary, continued updating of skills, TS security clearance, and aggressive investment portfolio (lifecycle funds), I think I'll be doing better financially in retirement than I would had I gone to the federal civilian side?

Thoughts?

P.S> I was a gov civvie for 2 years but got RIFed and so went contractor.
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Old 05-29-2014, 08:40 PM
 
48,516 posts, read 83,890,268 times
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Without saying exactly what you do and your level ;impossible to say really.
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Old 05-29-2014, 09:07 PM
 
596 posts, read 815,666 times
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If you value security for your retirement, then fed > contractor. I retired from the federal govt, and I get a pension and they pay part of my health insurance premiums. I also worked for a govt contractor after retirement. It was a good job at first, but a new boss came in and basically fired everyone but his son (who was the most junior employee). You might do better financially for a period of time by working for a contractor, but there is also more risk. Not only is it easier to get fired (unless you have a strong union), your retirement nest egg will be at the mercy of the stock market.
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Old 05-30-2014, 08:44 AM
 
Location: Jamestown, NY
7,841 posts, read 7,324,391 times
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As an employee of a contracting firm (as opposed to an independent contractor who just gets paid $ with no benefits), you contribute to Social Security. As a fed employee, I don't know if you pay into SS, which if you don't would be a serious consideration. I believe that federal pensions are tied to your SS as well. That's something that you will have to also calculate.

I'm a current state public employee, and the only reasons that I stayed were the health benefits and the pension system. I'm in IT, and IT salaries in the public sector are pretty paltry compared to the private sector. OTOH, being a single woman, having a secured pension in my future and a decent paying job with good benefits now, was and is more important to me than raking in big dollars, particularly if it required me to live in places where I didn't want to live.

Everybody has to make this decision on what he/she feels is most important to them, and what's best for one person isn't best for another.
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Old 05-30-2014, 10:18 AM
 
5,392 posts, read 6,529,269 times
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OP, you have been both so you know better than anyone what would be better for you.

FWIW I was a fed then a support contractor after I retired. so I have done both. One thing I appreciated was as a contractor I didn't have to put up with half the garbage that the fed counterparts did. I could just do my job and I liked that. No need to play the game, just make everyone else look good including your company.

It is risk vs reward.

Good luck in your decision.
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Old 05-30-2014, 10:22 AM
 
Location: Central Massachusetts
4,800 posts, read 4,843,254 times
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Quote:
Originally Posted by Linda_d View Post
As an employee of a contracting firm (as opposed to an independent contractor who just gets paid $ with no benefits), you contribute to Social Security. As a fed employee, I don't know if you pay into SS, which if you don't would be a serious consideration. I believe that federal pensions are tied to your SS as well. That's something that you will have to also calculate.

I'm a current state public employee, and the only reasons that I stayed were the health benefits and the pension system. I'm in IT, and IT salaries in the public sector are pretty paltry compared to the private sector. OTOH, being a single woman, having a secured pension in my future and a decent paying job with good benefits now, was and is more important to me than raking in big dollars, particularly if it required me to live in places where I didn't want to live.

Everybody has to make this decision on what he/she feels is most important to them, and what's best for one person isn't best for another.

A Fed employee pays into SS.
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Old 05-30-2014, 11:57 AM
 
29,764 posts, read 34,851,819 times
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Quote:
Originally Posted by doss1 View Post
Hey guys,
Currently I'm a contractor with a security clearance and have had opportunities to crossover to the fed side. In my case, is it really worth it to jump to the fed side or should I stay contractor for the next 25+ years?

I know job stability as a contractor is always a topic of concern, but lets put that aside for now.

I am 33 years old and currently make 100k/year. The benefits (e.g. life/disability insurance, tuition reimbursement, etc) are similar to federal civilians except for 2 main items:

1.) Healthcare is paid for my by employer and not deducted from my salary (I pay typical copays, but that is reimbursed up to 1k/year with a HRA debit card from employer)

2.) And the biggie...employer contributes 18% of my salary every year to a Vanguard SEP-IRA. This is NOT taken from my salary, it's on top of it.

On the federal civilian side, that salary is not very common within my agency. Even so, health insurance and retirement contributions are taken from fed civilian paychecks. I do know that civvies get a retirement annuity as well as medical insurance in retirement, something that is not available for me as a career contractor. However, due to my high salary, continued updating of skills, TS security clearance, and aggressive investment portfolio (lifecycle funds), I think I'll be doing better financially in retirement than I would had I gone to the federal civilian side?

Thoughts?

P.S> I was a gov civvie for 2 years but got RIFed and so went contractor.
I understand your question. My son is in the same boat along with a number of their friends. Some have opted the government route and others the contracting route. I have heard their discussions and understand his reasons for going the contract route. Not sure what you specialty is but part of his thinking is that by working in the private sector he is able to change jobs and develop a different skill set and increase his earning and longevity possibilities. He has worked on various private/public projects has security clearance and pretty much changes jobs at will. He knows if he gets stale there will eventually be a younger him to take his place. Tough choices you know your career trajectory and best of luck. One of the things by not working directly for the Federal Gov't he has gotten multiple types of clearance and not levels but you know the various types of who grants them.
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Old 05-31-2014, 02:36 AM
 
Location: Maryland
1,534 posts, read 3,780,288 times
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OP: My $0.002 opinion: (My valuation of my opinion may be excessive, but forgive a grey haired old geezer CSRS retired Fed in his dotage. My first "Federal employment" was as a Marine infantry grunt in Viet Nam. I enlisted in '68, got banged up a bit with permanent disabilities but survived. I'm not the brightest bulb in the box you'll run into.)

Your subject is one which I've spent some serious time analyzing because its a very important family matter. I've a daughter, age 32 - Grade 15/step 3 and my son-in-law (SIL), age 35 - Grade 15/step 1, both under the DC area pay scale (which I'll use in reference to their income/retirement decision planning in subsequent discussion points.)

I've had extensive discussions and performed analysis concerning their long term/retirement situation under the FERS system. I've been intimately involved in developing their career strategies. Both of them plan to move to Federal private sector contractors when it suits them and turn their Federal expertise into much higher private sector compensation in their respective areas of expertise.

My advice to you - Stay with the private sector, absolutely keep up with technology developments and shoot for the highest security clearance(s) you can get. My reasoning is thus:

In your WY location OPM pay scale, a $100K salary puts you at either a very senior Grade 13/step 8 (unlikely for a 33 year old Fed) or 14/step 2 step comparable Fed pay level. (OPM salary table for RUS (Rest of the US). (http://www.opm.gov/policy-data-overs...f/2014/RUS.pdf).

I'm willing to venture that you are a competent, non-managerial techie. Most 14 positions in the non-metro Federal areas are supervisory positions, which is a whole different ball game with its own unique set of hassles and negative cost/benefits. I happily avoided supervisory duties during most of my career and retired as a 14/step 10 by design at age 56.

The problem with Federal employment at those levels for a youngster in their 30's is this - you have very little salary increase room down the pike. Annual pay increases, whether through step increases or COLA factors, are fairly dinky and do not even keep you even with real cost of living changes at a static salary level. (Forget about CPI numbers, just track your real year over year actual cost increases for basic living expenses and you'll get my drift.)

In reference to the above comment, my 32 yr old daughter at her current $133K salary (15/step 3) is looking at a current dollar cap of $157K at the 15/step 10 pay level for her career max. Even if we assumed a max pay level under the DC SES schedule (if she were foolish enough to go that route) in current dollars of $179.5K - BIG WOOP!!! over the remaining decades of her career time frame.

The same analysis is applicable to my SIL's situation. He came from the private sector (video game development project manager for international teams making $150K) four years ago when his last gig ended and he concurrently became a daddy.

The constant international travel requirements, time differentials for team discussions (many of his developers were in India/Asia & Europe) and 80+ hour weeks were a decision point for him. He decided to go with the Fed for a number of years to develop some highly marketable expertise in Federal contractor areas, then return to the private sector with a federal contractor. That plan is well on its way to execution, he is already getting offers at 1.5 to 2 times his current salary.

For Federal employment, promotional opportunities are not very attractive in the context of multiple decade time frames from your current level in a Federal position, especially in non-metro areas.

Even if one includes making the jump to the Senior Executive Service (SES), the cost - both financial & non-financial, versus the benefit are, IMO, distinctly negative. In effect, the longer a competent individual stays with the Fed, the more they lose in future income and retirement security.

If my old CSRS pension system were still available, this would be a different discussion. Under FERS, the numbers do not favor a Federal career versus a Fed contractor position.

The FERS 1%, high 3 pension (under age 60 or 1.1% 60+) plus the FED's maximum contribution of 5% of salary does not cut it in comparison to most decent Federal contractor compensation packages I am familiar with; your company's 18% level is awesome! Combined with your own savings/investment program you should be able to amass an excellent retirement nut unless you are genuinely stupid.

The bottom line, in my opinion, is that Uncle Sam does not offer a remotely competitive compensation package for individuals who can walk and chew gum concurrently. Both my daughter and SIL will utilize their Federal expertise to migrate to private sector Federal contractor employment which pays much higher levels of compensation over their career time frames.

Federal employee compensation for professional level individuals is, IMO, a serious problem for the quality of the Federal workforce going forward. Its unfortunate but a fact of current life - Uncle Sam does not offer competitive compensation for competent individuals in the current market on a career basis. I hope this was worth your time to read, if not - such is life. JMNHO

Last edited by Pilgrim21784; 05-31-2014 at 03:18 AM..
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Old 05-31-2014, 10:34 AM
 
5,635 posts, read 13,971,828 times
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^Pilgrim, thank you for your comments.

I'm trying to stay away from confirmation bias when thinking about my situation, but I really can't find any real risk if I stay contractor. Fellow contractors I talked to have been employed without any issues for over 15+ years. The ones that did lose their contract were quickly picked up by other firms within the agency, and they are nowhere near as qualified as I am with my job. I think this is a risk worth taking, but I will keep my options open for a GS spot down the line. The problem is the clock is ticking if I want to put in 20+ years of GS service for the pension benefit. I rented a hotel this weekend to think it all through and plan out my goals for the next 30 years.

Btw, Pilgrim, you obviously did something right if your kids are already GS13s!!!
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Old 05-31-2014, 12:00 PM
 
Location: Maryland
1,534 posts, read 3,780,288 times
Reputation: 2307
Your quite welcome and good luck with the planning effort. Its encouraging to see youngsters have their act together. Long term plans are always subject to the reality of real time events, but without a serious plan - few will fumble through to a pleasant ending.
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