Question for State Workers (credit, bankrupt, income)

[ecsdude]

Originally Posted by MyNewsLogin

That is a question only you can answer. At this point, I would not recommend anyone start with the State. The pension is not there anymore, the pay has not kept up with inflation, and there are no legal protections on the job. However, people are still drawn to the steady, mostly predictable environment with a reliable paycheck each month.

You will have to weigh the pros and cons based on your values and your circumstances. No one can do it for you.

(Regarding legal protections: State employee contracts can and have been changed unilaterally by legislative action without going back to the bargaining table and are, therefore, worthless; California labor code specifically exempts the State from having to follow it; and the California Supreme Court ruled that State employees are not covered by Federal labor laws. There was no appeal on that ruling so it is currently legal precedent.)

I would tend to agree with what I put in bold above, from your quote, but I ran some numbers and it seems it could be a wash for me going back to private vs staying put @ State. Ideally, I'd like to retire @ 55, which would mean I'd spend a total of 15 years @ State. If I make just over $60K but my classification pay range caps out after 4 years of service or so at $76K due to 5% MSA and an average of 3.67% raise over the next 3 years due to new contract, and a good likelihood that in the last 3 years @ State I could move up to the next classification and cap out around $86K or so, I came to the conclusion that even with a total base pay starting at $90K as a developer in the private sector + another 10K in 401k employer contributions and performance bonuses and what not, I'm looking at $1.2M plus whatever compounding the 401K contributions do over the next 12 years. If I stay @ State for the next 12 years, for 15 total, I'd make about $956K base pay. Add to that a pension worth 19.5% of my highest pay in my last 3 years of service = $16,770. Assuming I enjoy 20 years of retirement, that's another $335,400, for a total of $1.29M over the next 32 years.

It's roughly the same final amount (Private sector may be more due to compounding 401K though), except I would be getting the whole thing 20 years faster by returning and retiring in the private sector.

I'd surely put in more than 40 hrs per week in the private sector, especially in tech. There would be more meetings, more stress, less feeling of job security.. but it would also be more challenging, working with higher performers, etc.

So in my case I may have to really consider a lot of factors to decide what's the best course for me to take.

[TheFlats]

Even if the pension is minor, it's nice to have that diversity of retirement accounts. 5-10 years in a pension, a healthy defined contribution account(s), social security later on. Retirement is usually cobbling together a variety of income streams anyways. With the state you have access to a 457 which doesn't have the early withdrawal penalties that 401k's have. And the pension gives you guaranteed cost of living increases and elimination of the tail end risk that you live to 105 and deplete your 401k. If we can't fix healthcare and you make it to at least 10 years you can stay on PERS insurance until Medicare kicks in, useful if you retire in your 50s.

I know what you mean about having the capacity to pick up new stuff at state vs. private sector. People underestimate the ability to grow your knowledge base in the public sector.

I think I placed you younger in my mind so maybe another stint in private isn't for you. Still, work on your SQL and c# and then start applying for stuff in the bay. You can take time off and drive down for an interview easily and can afford to be picky so you're not thrown into a dysfunctional or non-impactful company. (Surprise folks, bureaucracy and useless meetings also exist in the private sector!). The quality of life is pretty good at the state though, and if you can snag one of the higher paying classifications (which it sounds like you can easily, especially in a couple years) then stick it out.

Check out the financial independence subreddit. Retiring at 55 is totally doable whatever your path, just can't let your lifestyle inflate too much.

[MyNewsLogin]

Originally Posted by TheFlats

With the state you have access to a 457 which doesn't have the early withdrawal penalties that 401k's have.

State employees also have access to a 401k. For both the 457 and the 401k, there is no employer contribution.

[MyNewsLogin]

Originally Posted by TheFlats

If we can't fix healthcare and you make it to at least 10 years you can stay on PERS insurance until Medicare kicks in, useful if you retire in your 50s.

In addition to having at least 10 years of service, you have to retire within 120 days of your separation date. So, you can not get vested in the pension, leave for the private sector, and then submit your retirement when you are old enough. Your separation date would be when you left for the other job.

[TheFlats]

Originally Posted by MyNewsLogin

State employees also have access to a 401k. For both the 457 and the 401k, there is no employer contribution.

True, but I would go for the 457 over the 401 because of that early out option. Well, hell, if you can max out one you can always open the second and start contributing there too. I think you can put 18K (and the catch-up amounts post 50) into both a 457 and 401. Of course on public salaries that's an impressive feat.

Originally Posted by MyNewsLogin

In addition to having at least 10 years of service, you have to retire within 120 days of your separation date. So, you can not get vested in the pension, leave for the private sector, and then submit your retirement when you are old enough. Your separation date would be when you left for the other job.

Yes, good catch, I should have specified this is only an option if you end your career with the state. One option is retiring at 55, staying on the insurance, and working a fun retirement job that may not have health benefits.

[ecsdude]

One more thing - do state workers get unpaid time off approved for interviews for other state jobs that may even be in a different department entirely?

[MyNewsLogin]

Originally Posted by ecsdude

One more thing - do state workers get unpaid time off approved for interviews for other state jobs that may even be in a different department entirely?

It depends. If it is a promotion, you should get the time, paid. If it is a lateral, you will likely have to take vacation to go. If you have any time built up, why take unpaid time off?

[MyNewsLogin]

Originally Posted by TheFlats

True, but I would go for the 457 over the 401 because of that early out option. Well, hell, if you can max out one you can always open the second and start contributing there too. I think you can put 18K (and the catch-up amounts post 50) into both a 457 and 401. Of course on public salaries that's an impressive feat.

I am hesitant to contribute to the 457 because, by law, all contributions and earnings belong to the employer, in this case, the State and the State can tap into that fund to pay its bills. It has happened in the past under Wilson. After numerous complaints, some people, not all, got back their principal but the interest was gone forever. Some of my coworkers in my early career had started with the State in the late 50s and early 60s and lost nearly all of their savings that they had been planning on for their retirement - 30+ years of contributions wiped out with a flick of the pen. Will it happen again? Who knows but it was legal then and is still legal.

[ecsdude]

Originally Posted by MyNewsLogin

I am hesitant to contribute to the 457 because, by law, all contributions and earnings belong to the employer, in this case, the State and the State can tap into that fund to pay its bills. It has happened in the past under Wilson. After numerous complaints, some people, not all, got back their principal but the interest was gone forever. Some of my coworkers in my early career had started with the State in the late 50s and early 60s and lost nearly all of their savings that they had been planning on for their retirement - 30+ years of contributions wiped out with a flick of the pen. Will it happen again? Who knows but it was legal then and is still legal.

Can you say the same for the pension?

[ecsdude]

Originally Posted by MyNewsLogin

It depends. If it is a promotion, you should get the time, paid. If it is a lateral, you will likely have to take vacation to go. If you have any time built up, why take unpaid time off?

Since my unit is being absorbed by a biggger one, and its members will likely be separated, re-assigned as seen fit, it looks like a good time to make a move. My current commute is nearly 2 hours a day by rail into Downtown, so I want to work closer to home. Fortunately, there are State offices 5 and 15 minutes away.

I've been with the state about 1.5 years and at first was applying for lateral transfer (started applying in April and am just now hearing back about those applications), but started wondering if I should really be only looking for promo opportunities at this point (higher classifications).

Got a call yesterday for an interview at the location that's a 15 minute drive from home (my 2nd choice), but it's the headquarters while the closer location is a smaller site for the same department. It would be a lateral transfer, so I'm kind of on the fence about it since it may mean I delay possible promotion (have to go thru 6-month probation again and likely wouldn't be considered for promo at least until a year after that at soonest, I'm guessing? If I stay put, I could probably get promoted sooner) but feel I should still do the interview and see if I otherwise like the opportunity. Plus it will be extra interview practice.

I do have the vacation time but just preferred not having to dip into it. But I can take a few hours off for interviews as needed.