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Worth going into government at 45?

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  • Apr 20th, 2016 6:25 pm
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[OP]
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Mar 26, 2015
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Worth going into government at 45?

My friend just got an offer with the BC government but he's already 45 and has no intention of working for 25 years as he tells me. So I saw some posts saying the pension is only good if you're in the government for 25 years.Any thoughts as to whether it's a good deal? His salary will be 85-90K as far as I can tell and he's making 110-120K now.

What other things should he consider?
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Nov 19, 2011
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Well the government pension basically grows based on how long you work there. In my opinion if he is changing jobs just cause of pension that is a poor decision, but I imagine that perhaps that person wanted to maybe work less in which case that might not be to bad. Basically if you are making as much as that person there should be no reason that your friend can't save more.
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Dec 15, 2014
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If he isn't going to put the 25 years, the pension is crap. So depends on how much hours he is putting in for the 110-120k. Maybe he works less hours for the 85-90k and that fits a better work life balance.
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Jun 5, 2012
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at the end of the day, it's not so much the pension amount but the pension benefits if any imo, which itself could be an incentive if it still exists when he retires. also, it's a career change with new experiences. who knows if this opportunity would benefit him in a future opportunity. 45 is not limited for further opportunities or working for the government is a place to die.

if the market value for his skills and experience is standard at the range, great. if he is over valuing his self worth, that is a whole different story.. usually the government is competitive, but not generous.
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Nov 26, 2003
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If they have the rule of 85 he needs to work only 20 years not 25. 20 years working plus his age (65) then. His take home from either place and spending habits are unknown so hard to say.
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Isn't it usually 2%/year? Or is just the federal?

Curious, what field is he in? 85-90k is a sweet salary for a government job to start.
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Nov 23, 2010
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Messerschmitt wrote: Isn't it usually 2%/year? Or is just the federal?

Curious, what field is he in? 85-90k is a sweet salary for a government job to start.
Yes, 2%. As long as you put in 5 years, the 1st year is the same as the 25th. The idea that you need to work 25 years is false. Of course your pension is going to be crap if you weren't saving for retirement while working elsewhere, though!
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Dec 3, 2004
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The people who are saying that pensions are "only good if you're in the government for 25 years" clearly don't know what they are talking about. They are probably the same people who don't understand how tax brackets work and say things like "Dude, overtime isn't worth it. It will put you in a higher tax bracket and you can actually lose money!!".

The BC government pension plans are simple. Everyone can retire with an unreduced pension at age 60 (as long as you've got 2 years of service, aka "vested"). If your age+service = 85, then you can retire earlier (but no earlier than 55).

So for starters, the "work 25 years" comment is off base. Why would 25 years make a difference? If you retired with exactly 25 years of service, then you would be able to retire at 60 years old, which is the exact same age your friend can retire at. Only people who work MORE than 25 years begin to benefit from early retirement (which is perhaps what those people who are quoting meant). Here's a basic chart that shows what I mean:

Start at age 18 = Retire at age 55
Start at age 25 = Retire at age 55
Start at age 27 = Retire at age 56
Start at age 31 = Retire at age 58
Start at age 35 = Retire at age 60
Start at age 45 = Retire at age 60
Start at age 58 = Retire at age 60

You get the point. So your friend, starting at age 45, is no worse off than anyone else who started working at age 35.

Do the people who started there before 35 benefit? Yes, but not by much. Someone who started at 31 can retire at 58. Whoopidy do. That's 2 years earlier. The real winners are the ones who started at 25 or younger, but that's a small minority. It's not like it's a huge deal breaker and it definitely doesn't meet the definition of making a pension not good. The majority of government employees you will find did not start there before age 30.

There are, however, other reasons why starting younger may be better (more complex) but they really don't affect your friend and there's nothing he can do about it. Suffice to say, however, that some people start out working at government in a very low salary for many years (and pay very little pension contributions) and then by the end of their career they are working in a high paying management job. Since the pension is based off your best 5 years, these people take advantage of the pension scheme more than others. In your friends case, he will be joining at an already high salary (90k). So to take advantage of the pension scheme (get more than he deserves), he would need to feel as though he has room to move up in pay significantly before the end of his career. And unfortunately, jobs over 100k in government are very rare. So if 90k is going to be around his max pay, then he won't benefit from that "5 year HAS" like others do.

Again though, these aren't reasons not to take the job. Bottom line... if he chooses not to take the job, the pension shouldn't be why. A 15 year pension at age 60 is still very good and will keep him afloat in his older years, especially if he has neglected his RRSP savings.
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Mar 30, 2016
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adamtheman wrote: The people who are saying that pensions are "only good if you're in the government for 25 years" clearly don't know what they are talking about. They are probably the same people who don't understand how tax brackets work and say things like "Dude, overtime isn't worth it. It will put you in a higher tax bracket and you can actually lose money!!".

The BC government pension plans are simple. Everyone can retire with an unreduced pension at age 60 (as long as you've got 2 years of service, aka "vested"). If your age+service = 85, then you can retire earlier (but no earlier than 55).

So for starters, the "work 25 years" comment is off base. Why would 25 years make a difference? If you retired with exactly 25 years of service, then you would be able to retire at 60 years old, which is the exact same age your friend can retire at. Only people who work MORE than 25 years begin to benefit from early retirement (which is perhaps what those people who are quoting meant). Here's a basic chart that shows what I mean:

Start at age 18 = Retire at age 55
Start at age 25 = Retire at age 55
Start at age 27 = Retire at age 56
Start at age 31 = Retire at age 58
Start at age 35 = Retire at age 60
Start at age 45 = Retire at age 60
Start at age 58 = Retire at age 60

You get the point. So your friend, starting at age 45, is no worse off than anyone else who started working at age 35.

Do the people who started there before 35 benefit? Yes, but not by much. Someone who started at 31 can retire at 58. Whoopidy do. That's 2 years earlier. The real winners are the ones who started at 25 or younger, but that's a small minority. It's not like it's a huge deal breaker and it definitely doesn't meet the definition of making a pension not good. The majority of government employees you will find did not start there before age 30.

There are, however, other reasons why starting younger may be better (more complex) but they really don't affect your friend and there's nothing he can do about it. Suffice to say, however, that some people start out working at government in a very low salary for many years (and pay very little pension contributions) and then by the end of their career they are working in a high paying management job. Since the pension is based off your best 5 years, these people take advantage of the pension scheme more than others. In your friends case, he will be joining at an already high salary (90k). So to take advantage of the pension scheme (get more than he deserves), he would need to feel as though he has room to move up in pay significantly before the end of his career. And unfortunately, jobs over 100k in government are very rare. So if 90k is going to be around his max pay, then he won't benefit from that "5 year HAS" like others do.

Again though, these aren't reasons not to take the job. Bottom line... if he chooses not to take the job, the pension shouldn't be why. A 15 year pension at age 60 is still very good and will keep him afloat in his older years, especially if he has neglected his RRSP savings.
++1
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So for the BC government, they're not earning 2% for each year of service to a maximum of 70%?

I think for the ON government, that's how it works, of course like Adam mentioned, those who joined sooner can go for earlier retirement but not sure if they get 60 or 70% off their average top 5 salaried years.
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adamtheman wrote: The people who are saying that pensions are "only good if you're in the government for 25 years" clearly don't know what they are talking about. They are probably the same people who don't understand how tax brackets work and say things like "Dude, overtime isn't worth it. It will put you in a higher tax bracket and you can actually lose money!!".

The BC government pension plans are simple. Everyone can retire with an unreduced pension at age 60 (as long as you've got 2 years of service, aka "vested"). If your age+service = 85, then you can retire earlier (but no earlier than 55).

So for starters, the "work 25 years" comment is off base. Why would 25 years make a difference? If you retired with exactly 25 years of service, then you would be able to retire at 60 years old, which is the exact same age your friend can retire at. Only people who work MORE than 25 years begin to benefit from early retirement (which is perhaps what those people who are quoting meant). Here's a basic chart that shows what I mean:

Start at age 18 = Retire at age 55
Start at age 25 = Retire at age 55
Start at age 27 = Retire at age 56
Start at age 31 = Retire at age 58
Start at age 35 = Retire at age 60
Start at age 45 = Retire at age 60
Start at age 58 = Retire at age 60

You get the point. So your friend, starting at age 45, is no worse off than anyone else who started working at age 35.

Do the people who started there before 35 benefit? Yes, but not by much. Someone who started at 31 can retire at 58. Whoopidy do. That's 2 years earlier. The real winners are the ones who started at 25 or younger, but that's a small minority. It's not like it's a huge deal breaker and it definitely doesn't meet the definition of making a pension not good. The majority of government employees you will find did not start there before age 30.

There are, however, other reasons why starting younger may be better (more complex) but they really don't affect your friend and there's nothing he can do about it. Suffice to say, however, that some people start out working at government in a very low salary for many years (and pay very little pension contributions) and then by the end of their career they are working in a high paying management job. Since the pension is based off your best 5 years, these people take advantage of the pension scheme more than others. In your friends case, he will be joining at an already high salary (90k). So to take advantage of the pension scheme (get more than he deserves), he would need to feel as though he has room to move up in pay significantly before the end of his career. And unfortunately, jobs over 100k in government are very rare. So if 90k is going to be around his max pay, then he won't benefit from that "5 year HAS" like others do.

Again though, these aren't reasons not to take the job. Bottom line... if he chooses not to take the job, the pension shouldn't be why. A 15 year pension at age 60 is still very good and will keep him afloat in his older years, especially if he has neglected his RRSP savings.
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Age Factor = unreduced pension. No penalty.

Factor is 90 (age + pensionable service) they can retire and receive an unreduced pension.
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alanbrenton wrote: So for the BC government, they're not earning 2% for each year of service to a maximum of 70%?

I think for the ON government, that's how it works, of course like Adam mentioned, those who joined sooner can go for earlier retirement but not sure if they get 60 or 70% off their average top 5 salaried years.
Early retirement is usually 55 yrs of age for the most part (Some Fire, Police and EMS are 50). If you have 30 yrs service and 55 yrs old you can retire without a penalty (60% best five yrs). You can stay on and max out your pension (35yrs or 70%). After this point you are working because you like working.

EDIT to add: I am speaking to the ON Gov referenced above.
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Ketchenany wrote: Early retirement is usually 55 yrs of age for the most part (Some Fire, Police and EMS are 50). If you have 30 yrs service and 55 yrs old you can retire without a penalty (60% best five yrs). You can stay on and max out your pension (35yrs or 70%). After this point you are working because you like working.
Thank you.

For government agencies, it seems there's a push to curtail retirement benefits so many choose to take early retirement rather than get the 70% max, which might go the way of the do-do by one's retirement. Keep healthy and dpn't forget to specificy keeping one's self on life support to keep getting the pension.
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The biggest advantage of moving into a government job at that age is the job security (assuming it's perm position).

Age 50 + is a very dangerous time in the private sector... Layoffs of highly paid senior staff to cut costs with little hope of being able to find work again due to your age.

So the job security combined with a decent 15 year pension to me makes this a no brainer.

You may make more money now but one of two years of work will cut that pay differential gap rapidly.
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Ketchenany wrote: Early retirement is usually 55 yrs of age for the most part (Some Fire, Police and EMS are 50). If you have 30 yrs service and 55 yrs old you can retire without a penalty (60% best five yrs). You can stay on and max out your pension (35yrs or 70%). After this point you are working because you like working.

EDIT to add: I am speaking to the ON Gov referenced above.
Alberta gov is similar. We use 85 factor. Our inflation protection is set at 60 percent which isn't bad. Are Ontario pensions inflation protected?
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I know for OMERS it is protected. Average is apprx. 2% a year if I remember right.
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Not to sure, I got in again at 39, and plan on staying. 85 factor means I have to stay until Im 62, so Ill just be or close to the 25 year mark.

Also, is that all he is worried about it pension. Work stress, wage and job security can be a big factor, either negative or positive depending on how you look at it at his age.

Basically he can work and not worry about job loss like the private sector. That can be worth it
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crimxxx wrote: Well the government pension basically grows based on how long you work there. In my opinion if he is changing jobs just cause of pension that is a poor decision, but I imagine that perhaps that person wanted to maybe work less in which case that might not be to bad. Basically if you are making as much as that person there should be no reason that your friend can't save more.
He lives in BC and he thinks the job market here is mainly Government and it would be good to join for that reason. Plus, yeah he heard "pension is good" but he doesn't fully understand things it seems
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Spidey wrote: Not to sure, I got in again at 39, and plan on staying. 85 factor means I have to stay until Im 62, so Ill just be or close to the 25 year mark.

Also, is that all he is worried about it pension. Work stress, wage and job security can be a big factor, either negative or positive depending on how you look at it at his age.

Basically he can work and not worry about job loss like the private sector. That can be worth it
Same situation as you spidey. Got in at 39 can retire at 62.

From a pension perspective I really feel like we got in "just in time" age wise in terms of being able to really benefit in retirement.

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