State Pension V.S. 401k

[astreia]

I currently have a state pension that puts in $180 every two weeks and I put $120 every two weeks.

I have a job offer for a 401k, which this job would increase my salary significantly for me. Around $15k increase per year.

I’m trying to figure out if there’s any way for a 401k to ever match my state pension, this has been my biggest holdback with taking another job.

My new job offer gives 4% into my 401k regardless of what I put in. I don’t want to work forever. Is it a bad move to leave my state pension?

I’m also not vested with the state so I’ll lose everything they put in the past two years.

Thanks

 

[ref7]

@astreia Hard to say without details on your state pension plan. What state, and what sub plan within that state system are you covered by?

Also hard to say without knowing what you could and would put in yourself into the 401k of potential new employer.

$15,000 annual salary raise "plus" 4% put by employer into 401k "might" be attractive--but hard to say without more details.

 

[lightsway]

@astreia Pensions make it impossible to be in the potential zero tax bracket in retirement. With a 401k it's possible.

Edit: Not impossible there are unique situations.

 

[tonid]

@astreia Is your long term earning potential significantly different with new gig vs state. I wouldn’t tie myself to the state for long term because they give you ~$4.6k/yr in pension.

I prefer 401k because I am in control.

States (such as IL, don’t know where you’re from) mismanage and underfund pensions, and could leave you bone dry in the end.

 

[adriw7878]

@astreia How long until vestment? I’d stay until that point honestly then Move on. It gives you alittle extra cushion down the road potentially.

 

[jc5]

@astreia You're missing some critical information here. How long do you have to work to collect the pension, what will it be worth, and does it carry other benefits (i.e. health benefits)?

There are certainly some situations where a higher paying job with a 401k will be better. But you'd have to know the expected value of the pension itself.

If you took the majority of that salary increase and put it into a 401k, along with a 4% match, you may well end up with more retirement income. But if you keep contributing the same amount and spend the extra money today, you'll probably end up with less retirement income.

Then there are other benefits to a 401k (i.e. portability) and to a pension (i.e. stability). But I think those considerations are secondary to how much retirement income each would generate.