Hi all! Hoping you can give your opinion on a potential career move my spouse is considering. Of course, there is more to the decision than simply the financials, but for the sake of the argument, I will primarily be focusing on the numbers on this post.
Current position: $100k salary + up to $40k commissions if goals are met. Full benefit package including company vehicle, 401k with 6% match, health vision and dental. Stock bonuses on occasion.
Potential Job Opportunity: $150k + up to $60k commission if goals are met. Full benefits including company vehicle, 401k with 5% match, health vision dental. Not sure on stock bonuses but let’s assume they’re the same.
At first glance, potential opportunity is a clear winner. However, current position also offers a pension. The calculations can vary drastically depending on salary, years of service, age of retirement etc. But assuming working until 55 and receiving benefits at 65, estimates put the pension at approx. $5000/mo at that time (much higher if working to 65 although that is unlikely, much lower if electing benefits earlier than 65).
The companies are very similar in size and within the same industry. The new opportunity is in the same position (not jumping up to management or something).
I have run some numbers myself and have my personal opinion, but I was hoping to get a fresh perspective from you all.
Thank you, and cheers!
Career Change? – Advice Welcomed
byu/Olivenoodler infinancialindependence
Posted by Olivenoodler
2 Comments
In my experience, pensions only start to make sense after you stay a long time with the company. They are incentives for you to stay with the company. You mention the value of the pension at 65. Since this is a financial independence sub, I assume you have a plan to retire much earlier. What is the pension worth under that scenario?
Don’t know how old your wife is or how long she’s been in her role, so cannot answer mathematically.
Pensions assume the company remains solvent the rest of your lives. It also not only keeps you from the better opportunity right now, but all future career growth opportunities.
Take the new role, get an even better one in a few years after demonstrating a track record of success, rinse, repeat.
Build wealth by getting to a point where you can earn real equity in a company. Not by shackling yourself to a potential pension if you stay at the same place your entire career.
Edit: another way to think about this. Take the $50k delta in salary for a few years, invest it. There’s your new “pension”.