#Pension vs Salary Increase: Making the Right Choice for Your Future
Understanding the Trade-Offs
When faced with the decision between a pension and a salary increase, it’s important to weigh the benefits and drawbacks of each option. Here’s a breakdown of the key factors to consider:
Pension: Long-Term Security
– Vesting at 5 years means you’ll have a reliable source of income in retirement
– Potential to earn a steady monthly amount for life, especially if you stay with the company for 30 years
– Provides peace of mind and financial stability in your later years
Salary Increase: Immediate Financial Gain
– Instantly boost your income with a $19,000 raise
– Allows you to enjoy a higher standard of living now
– Opens up new opportunities for saving and investing
Factors to Consider
– Are you willing to sacrifice the security of a pension for a higher salary?
– How important is the flexibility of working from home for you?
– Can you handle the added stress of business travel?
Making the Decision
Ultimately, the choice between a pension and a salary increase will depend on your individual priorities and long-term goals. Here are some tips to help you make the best decision:
– Evaluate your financial needs and future plans
– Consider the stability and growth potential of both companies
– Think about your work-life balance and overall job satisfaction
– Seek advice from a financial advisor or mentor
In conclusion, there is no one-size-fits-all answer to the pension vs salary increase dilemma. It’s important to carefully weigh the pros and cons of each option and choose what aligns best with your personal and professional aspirations. Remember, the decision you make today can have a lasting impact on your future financial well-being.
Assuming both jobs have same potential for growth/progression, the $110k job. That future pension is too little (especially accounting for inflation) compared to the pay difference today.
Just watch that “25%” travel job. I was sold a similar bill of goods and the real story was fly out Sunday night, get home Friday night, or Saturday morning. Then blow 8-10 hours doing reports on the weekend. The money was great, but still not worth it…
That’s a garbage pension. Imagine if you put the salary difference into investments over that time period. Do some math and it’ll be pretty clear that the higher salary is the way to go.
For comparison, my government pension will pay 3% of my final average pay for every year I work. If I work 30 years, I’ll get 90% other my average pay for the rest of my life. 33 years and 4 months will get me 100%.
With the pension you’re talking about, you’re still going to need significant money in retirement accounts to supplement that.
If you’re 30 now that pension is only worth $20k in 2 more years assuming no cola.
ANY pension is a rare and valuable thing. BUT, if you’re not staying 30 years (or would you?) it might not be worth it –especially if you’re looking at collecting this decades from now. $350/month in 30 years will be just enough for a cup of coffee — one cup.
IF you can make a lot more money climbing the salary ladder, go for it. I don’t know enough about your field and whether you’re already near the top. Does the pension have a COLA or is it just flat?
Also, can you play the higher job offer for a bump at your current job?
So pensions are easy to replace with a bit of planning if you get a significant raise by moving. Consider if you have 30 years and say you saved all of that 19k a year difference averaging 7% returns, you would end up with over 1.5 million which could generate 5k a month 30 years from now. Granted, that is if you save that money in stocks over that time period. Utilize tax advantage investment accounts.
I would take the money and no travel. A lot can happen to a company in 30 years and that pension could disappear.