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I’m trying to decide how much a fixed pension with COLA is worth. I’ve worked in IT for 10 years as a database administrator. A few years ago, working full time, I pursued a master’s degree in public administration with the goal of working in the federal government. It’s been three years since I graduated, and after sending out several hundred online applications to the federal government and attending job fairs I’m through with wasting my time.

During this time, and after getting my degree, we sold our house out of state and I went to work for a small non-profit in the northern Virginia area doing their DB and web work. At the same time I’ve been applying for local government jobs. I was just offered one with a local municipality; however the homes in DC are astronomically priced so I’m left with a 28 mile, 90 minute commute and no public transit easily available. We currently rent as the homes are very costly in outlying towns. The position is also a 15% cut in pay. (I’m taking into account that they pay for 100% of medical with that 15% figure)

This city job has a generous, COLA pension which is 3% inflation and partial up to 5% inflation. After 5 years I get 12.5% of my highest three years, going to 50% of my pay after 20 years. Because I’m taking a hit in the job title as well as starting at the range midpoint, after 8 years I won’t quality for any more raises unless I move into a new position with the city. Additionally, I get 4 hour blocks of overtime if called into the office for emergencies, unlike now where I work 50 hours with no OT.

The city job also pays into social security so I would collect all of that after my working career.

My understanding is that federal pensions are about half of this but I can’t find information. All of my web searches refer to non-COLA pensions in the private sector.

We might be able to get by financially in this position, but it will mean renting for the foreseeable future, maybe until retirement. One advantage I see is security, as I’ve been downsized 3 times in 10 years, each time taking 4 or 5 months to secure a new job. I’m 46 now and although we sock away retirement we never seem to get anywhere with our investments. Only after starting some steady investments with a few of the Fool newsletters, from the money we made on the house, are we seeing any gains.

At the same time I’ve been offered a position in south Dakota which will enable us to buy a house with 75% down or even a decent house cash. The position would pay about the same I make now with a 70% match on the 401K. It involves travel with some unpaid overtime. We like the Midwest and cold weather so the location isn’t an issue. We also like Northern Virginia for the cultural activities.

The third option is to take ANOTHER position I’ve been offered working with an IT contractor just a mile from my house. It’s a slight raise but I could spend the time looking for a federal job. Friends of mine who work in government say that there are more agencies moving out to West Virginia.

My question for everyone out here then has to do with comparisons. Even with the Midwest job paying more, is the pension with the city in an astronomically expensive area a better deal? If I took the city job, would working just 5 years with the COLA pension be a good deal for me?
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