How much is a pension worth? - venki.dev
One unique benefit of a government job is a pension. But its value can often be a little inscrutable - how much more is a job that includes a pension really worth?
Should you turn down a private sector job that offers to double your salary solely because it doesn’t have a pension? What about a job that offers just 10% more than your current salary?
Pensions, formally “defined benefit plans”, are plans where you get a predefined monthly income upon retirement. This contrasts with “defined contribution plans”, where your employer puts in a fixed amount of money into a savings account.
These plans are in fact structurally quite similar: hovering around 2% per year worked, and a retirement at 62. Older plans that employees may be grandfathered into tend to be more generous.
For a quick worked example, consider John Smith, who retires at 62, after 30 years of service, making $100k/y for his last few years, and has a pension plan that pays at 2% per year of service.
,xPosition=0.2546875,yPosition=0.4583333333333333)
