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Private vs Public Comparison — User Guide ​

The Compare tab puts a private-sector 401(k) retirement side-by-side with a public-sector pension retirement using the same salary, the same age, and the same timeline. It answers the question most workers never think to ask: "What if I had spent my career in government instead?"

This tool is designed to make the gap visible — and to show what happens to each path when the economy crashes.

What This Tool Does ​

The comparison engine runs two parallel retirement calculations:

Private Sector path: Your salary goes into a 401(k) with an employer match, grows at a market rate of return over your career, and is withdrawn at a 4% safe withdrawal rate in retirement. Social Security is added on top.

Public Sector path: The same salary earns a guaranteed defined-benefit pension (calculated using actual government formulas), plus a 457(b) deferred compensation plan (the government equivalent of a 401(k), but with no early withdrawal penalty), plus Social Security. The pension cannot lose value — it's constitutionally protected.

Both paths assume identical starting conditions. The only difference is where you work.

Step-by-Step: Using the Compare Tool ​

1. Scenario Picker ​

At the top, you'll see pre-built scenarios — common career profiles like "Mid-Career Professional" or "Late Starter." Clicking one auto-fills the inputs with realistic defaults for that situation. You can also customize everything manually.

2. Your Numbers ​

This collapsible section contains all the inputs that drive both calculations:

  • Annual Salary — your current (or expected) annual salary
  • Current Age and Retirement Age — defines your accumulation period
  • 401(k) % — the percentage of salary you contribute to a 401(k) (private path)
  • Employer Match % — what your employer matches (private path only; government employers contribute to your pension instead)
  • Current 401(k) Balance — any existing 401(k) savings you already have
  • Expected Return % — the average annual investment return you expect (7% is a common long-term assumption for a stock/bond mix)
  • 457(b) Contribution % — the percentage you'd contribute to a 457(b) on the public sector path (this is your supplemental savings on top of the pension)
  • Pension System — which public pension formula to compare against (defaults to CalPERS 2% @ 62 PEPRA)

TIP

The 457(b) is the public sector's secret weapon. Unlike a 401(k), there's no 10% early withdrawal penalty before age 59½. If you retire at 55 from a government job, you can immediately access your 457(b) — try doing that with a 401(k).

3. Recession Simulator ​

This is where the comparison gets powerful. Select a historical recession event:

  • 2008 Financial Crisis (-38%)
  • Dot-com Crash (-49%)
  • COVID 2020 (-34%)
  • 2022 Bear Market (-25%)
  • 1973 Oil Crisis (-56%)

Then use the slider to choose which year of retirement the crash hits. A crash in Year 1 of retirement is devastating to a 401(k); a crash in Year 10 is less severe but still painful.

The key insight: the pension line never moves. Pensions are formula-based — they don't depend on account balances or market conditions. A 401(k) can lose 40% of its value overnight; a pension pays the same amount the next morning.

Understanding the Results ​

Income Timeline Chart ​

The 30-year income chart plots annual retirement income for both paths, year by year. The red line is private sector (401(k) + Social Security), and the green line is public sector (pension + 457(b) + Social Security).

If you've selected a recession, you'll see a dashed vertical line marking the crash year. Watch how the red line drops — sometimes permanently — while the green line continues unaffected.

Results Breakdown ​

The side-by-side cards show the full math for each path:

Private Sector (left, red border):

  • 401(k) balance at retirement
  • Annual withdrawal at the 4% rule
  • Social Security estimate
  • Total annual and monthly income
  • Replacement ratio (income as % of working salary)
  • Depletion age — when the money runs out. If this number is below 90, you're at risk of outliving your savings.

Public Sector (right, green border):

  • Annual pension (guaranteed for life)
  • 457(b) withdrawal at 4%
  • Social Security estimate
  • Total annual and monthly income
  • Replacement ratio
  • "Forever — lifetime guarantee" — the pension never depletes

Head-to-Head Comparison Table ​

A compact table comparing specific metrics. The winner in each row is bolded. This table covers income, replacement ratio, market risk, longevity risk, and more.

Recession Impact Box ​

If you selected a recession, this red-toned card shows the specific damage:

  • How much 401(k) balance is lost in the crash
  • The new (reduced) annual income for the private path
  • Income lost per year compared to the no-crash scenario
  • The pension amount (unchanged)
  • When the 401(k) fully depletes after the crash

This section makes the abstract concept of "sequence of returns risk" concrete and personal.

Constitutional Shield ​

Every public pension we model has constitutional or statutory protection. This green card shows the specific legal citation:

  • California: CA Constitution, Article XVI, §17 — the "California Rule" protects all accrued benefits
  • New York: NY Constitution, Article V, §7 — benefits "shall not be diminished or impaired"
  • Federal: 5 U.S.C. §8348 — statutory contract rights protecting FERS/CSRS

It also explains the backstop — if the pension fund is underfunded, taxpayers and employers absorb the shortfall, not retirees.

Pension Present Value ​

This card answers: "How much would I need in a 401(k) to replicate this pension?" The present value calculation tells you the lump sum a private-sector worker would need saved to generate the same income stream as the pension. For many government workers, this number is $1–3 million — an amount most private-sector workers never accumulate.

Lifetime Income Advantage ​

The total public-sector income advantage over 30 years of retirement. This is the cumulative difference between the two paths. A positive number (green) means the public sector path produces more total retirement income.

Assumptions and Methodology ​

The comparison uses several standard financial planning assumptions, all listed in the fine print at the bottom of the page:

  • 4% withdrawal rate — the most widely studied "safe" withdrawal rate for retirement portfolios
  • Social Security — estimated from salary using a simplified PIA (Primary Insurance Amount) formula; both paths include the same Social Security benefit
  • Inflation — the expected return is adjusted by 2% inflation to produce a "real" return
  • COLA — pension cost-of-living adjustments vary by system (e.g., CalPERS PEPRA is 2% simple COLA); the comparison includes COLA in the pension income
  • Recessions — recession events are modeled as a one-time portfolio loss with a recovery period; the pension is unaffected

WARNING

This tool is illustrative and not financial advice. Your actual results will depend on many factors not modeled here, including tax treatment, specific Social Security claiming age, healthcare costs, and actual investment returns. Consult a financial advisor for personalized planning.

Sources & Methodology ​

The expandable Sources & Methodology panel at the bottom lists every official government publication used to build the pension formulas. Each source includes a direct link and description. These cover:

  • CalPERS and CalSTRS benefit factor tables
  • New York NYSLRS and NYSTRS formula documentation
  • Federal FERS/CSRS annuity calculations
  • Constitutional protection citations
  • Social Security Administration publications

Common Questions ​

Is this fair to the private sector? The comparison uses the same salary and contribution rate for both paths. In practice, private-sector workers often have higher salaries than government workers in the same role — but the pension benefit, constitutional protection, and immunity to market crashes more than compensate in most scenarios.

What about employer match? The default assumes a 4% employer match on the private side. Government employers don't typically "match" your 401(k) — instead, they fund the pension system directly. The pension contribution is effectively a much larger employer benefit than a 4% match.

Why is the 401(k) depleting? The 4% rule is a guideline, not a guarantee. In scenarios with early crashes or below-average returns, a 401(k) can be exhausted before death. Pensions can't be exhausted — they pay until you die, and often continue paying a surviving spouse.

Can I use this for my state? Yes — use the "Compare Against Pension System" dropdown to select any formula we support, including New York, Federal, and California systems.

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