Everyone knows about the crisis of pension plans in this country. What we don’t discuss enough is the crisis sitting in your private sector 401k. The Economist wrote a quick article about the real issue facing private sector employees that nobody read or thought about late last year. Here is the link.

Let me break it down for you in real clear words.

Public-sector workers with pensions on average get 18.6% of their pay salted away for them in the form of pensions. Those same public sector employees make contributions of around 6.5% on top for a total of 25.1%. Again, this is the average.

Private-sector workers contribute around 6% from employee contributions and 3% from the employer. That is only 9%. No wonder we have a generation of baby boomers unprepared for retirement. We can be cynical and say workers aren’t saving enough. I think we all miss the point.

Here is my point. There is no magic number, but if you are not putting a minimum of 15% away on a consistent basis, you probably have a problem. At some point the math comes up and hits you on the head.

You know how many people like to say the money is better in the private sector, but the pension benefits are better in the public sector? This is the wrong way to think about it. That extra money you are getting for engaging private enterprise may simply be a mirage if you are spending 90% of your income. If you are complaining that your public sector job isn’t as lucrative as your private sector counterparts, just remember that almost 20% of your pay is saved for your retirement.

Just like investing, there are tradeoffs with any job. Just make sure you do the math and understand the economic reality, not simply the amount that hits your checking account short term.