"Current employer has an ESOP, potential future employer has a pension plan. Which is better?": I have lucrative retirement options, but can't decide which one is best for my future. What should I choose?

Hey Money Minder,

I (Joe Jobseeker) am in the process of potentially getting a new job and am looking to compare my options. Which do you think is better.

Current employer: Been here for 4.5 years, making 62k a year, usually grab around 2k in bonus annually. Company has an ESOP and my shares are currently worth 18k, my vested amount is 15k. Fully vested at 5 years. My ESOP shares are projected to be worth around $400k by 2036. Not sure if that means anything though because I’m assuming share price can change. 401k match is 4%. I also get 100% of family health insurance premiums paid for. Company kicks in $1200 to HSA. And oh, I’m not really vibing with this job or some of the people.

Potential new Employer: Starting salary is 80k but with my experience I could see 85-90k. Not sure if there is a bonus program. Company has a pension plan where the employer contributes 14% of salary annually. Fully vested after 3 years. Not sure what the pension benefit formula is. 401k match is 2%. Health insurance premiums for entire family would be $380 per month. Company also contributes $3,800 to HSA regardless of what I put in.

Both jobs have good work life balance and the team I would be working with is roughly the same size. Both are about the same 12 min commute to work. I’m mostly wondering which has the better retirement option.

So, which one do you think I should go for?

Later, Joe Jobseeker

Response from THE MONEY MINDER:

Hello There,

If I may say so, congratulations on potentially receiving a job offer from a new employer, M27. It sounds like you have presented a very detailed comparison between your current and potential new job offers, which is commendable.

Based on the information you provided, it seems like the potential new employer offers a more attractive financial package, especially in terms of salary and employer contributions to your pension plan and HSA. The starting salary alone is significantly higher, and with the potential for further increases based on your experience, it presents a strong case for financial growth.

Regarding retirement options, both employers offer valuable benefits. Your current employer has the ESOP with significant growth potential, and the family health insurance premiums are fully covered, which is a substantial saving. On the other hand, the potential new employer’s pension plan contribution of 14% of your salary annually is quite generous, along with the employer’s contribution to the HSA.

Taking into consideration your current job dissatisfaction, the financial benefits, and retirement options, the potential new employer seems to have the upper hand. However, it’s essential to also consider non-financial aspects such as job satisfaction and work environment.

Ultimately, it’s a personal decision that requires weighing the pros and cons of each option. If you believe the new job will offer you more career satisfaction, growth opportunities, and financial security in the long run, it might be worth considering making the switch.

Best of luck with your decision-making process, M27. Remember to prioritize your overall well-being and future financial stability in choosing the option that aligns best with your goals.

Farewell from THE MONEY MINDER.