One of the top reasons you likely decided to work for the federal government is that the benefits package is far better than what the private sector offers. Have you ever wondered how much your benefits are worth in hard cash?
A 2021 study from the Bureau of Economic Analysis (BEA.gov) shows that the average value of federal benefits was over $44,000 for that year alone. In fact, the Congressional Budget Office (CBO) says that the compensation package for federal employees averages 52% higher than any found in the private sector.
Working For Uncle Sam Verses The Private Sector
According to the CBO, the average federal worker still receives more in total compensation, including benefits, than their private‐sector counterpart. On average, federal civilian workers whose highest level of education was a bachelor’s degree earned 5% more when compared to the private sector. Even more surprising, federal workers with a high school education earned 34% more, on average, than similar private sector workers.
Add to this, federal workers enjoy far better job security. According to the U.S. Bureau of Labor Statistics (BLS), federal workers are laid off at one‐quarter the rate of private‐sector workers. Job satisfaction also appears to be better considering the voluntary quit rate in the federal government is about one-quarter as high as the private sector.
“Is a defined benefit pension like your FERS or CSRS annuity better than a 401(k)? If you look at the big picture the answer is: yes.”
The Value Of Your FERS Pension
Since the 1980s, private sector pension plans have been slowly becoming extinct having been replaced by a 401(k) and similar plans. According to the BLS, as of March 2022 only 15% of private sector workers reported having access to a pension plan that provides a fixed monthly income for employees at retirement.
Is a defined benefit pension like your FERS or CSRS annuity better than a 401(k)? If you look at the big picture the answer is: yes. Though accumulating cash a 401(k) seems like a good way to achieve financial security in retirement, it doesn’t provide risk-free, guaranteed income for the rest of your life.
When you do the math, your monthly annuity will likely add up to more than the national average balance of a 401(k). Then again, as a federal employee you have the ability to save even more in your own version of a 401(k): the Thrift Savings Plan (TSP).
Work with an FRC® trained advisor who understands the true value of all your federal benefits and how to get the most out of them. Together, you can develop a retirement strategy that provides life-long financial security.
