I’ve been in and out of a federal job multiple times and yeah we have a few people recently retired with $2M+ in their 401K plan simply due to maintaining a consistent contribution and leaving it in the stock fund. One of them wasn’t any kind of high level employee. I think he retired as a GS13.
Of course the last few decades have been good for the market, we’ll see how it is going forward.
I did a quick run at portfolio visualizer with a time frame running from 1985 to 2022. If you started with $1,000 in the market and contributed $5K per year ($2.5K by you and another $2.5K by your company) you would have ended up with $1.57M. That is assuming a constant contribution and not increasing it based on inflation, salary increases, etc.
The federal government pension and 401K contributions are solid but nothing exceptionally generous compared to well paid jobs in other companies.
The government gives you 1% automatically.
Then matches the next 3%
Then matches 50 cents per dollar for the next 2%.
So they will give you 5% if you put in 5%.
Many places, especially tech jobs are more generous. I know even my somewhat stingy previous company gave us 6% regardless of what we put in and had no vesting time.
1% per year times years of service times average high 3 year salary.
So if someone retires with 35 years of service they get 35% of their salary in retirement.
Older folks like me only have to pay 0.85% towards the pension, newer hires have to contribute 4.4% of their pay. Many of the new hires view that as a big negative since they don’t anticipate retiring from the government.
(The old CSRS was phased out and I was not eligible for it even though I started way back in 1985. That one people didn’t pay nor received social security but did earn 2% per year for retirement so at 55 if they had 35 years of service would get 70% of their salary as a pension.)
There are differences if you have some kind of special government job like law enforcement/FBI/etc. I used to hear people saying to me “Well you can retire after 20 years”. No, that is the military or those in the other special occupations. Generally the federal retirement system allows you to retire w/o penalty at a minimum retirement age (for most it is between 56-57) and 30 years of service. Of at 60 and 20 years or 62 and 5 years.
For those who just contributed, ignored the ups/downs of the market, the last few decades rewarded them generously.