Increasingly, more federal employees are considering contractor roles each year. Higher pay and greater flexibility pull many toward the private sector. Burnout, return-to-office mandates, long commutes, and stalled career growth push others in the same direction.
This shift brings real trade-offs in pay, benefits, and retirement planning. Understanding these differences and how they fit your personal and financial goals helps you make a well-informed decision about the next step in your career.
Why More Federal Employees Consider Contracting
Contractors in tech, systems engineering and technical assistance (SETA), consulting, and defense continue to seek seasoned federal talent. Experienced Feds bring insider knowledge of agency processes, compliance requirements, and mission priorities — skills that private companies value highly.
Contracting roles often come with higher salaries, more flexible or remote work arrangements, and the chance to take on specialized projects that align with personal expertise and career interests.
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How Contracting Compares to Federal Employment
For many in-demand skill areas, federal employee vs. contractor pay comparisons show contractors frequently out-earn their government counterparts, especially in tech, cybersecurity, and defense. The benefits picture, however, looks different.
Federal employees receive Federal Employees Health Benefits (FEHB) coverage, generous leave policies, participation in the Federal Employees Retirement System (FERS), and strong job security. Contractor benefits vary widely by employer — some match or even exceed federal offerings, while others provide only basic coverage.
Retirement planning changes when you leave FERS. You may move to a 401(k) with potential employer matching, which can be competitive but doesn’t offer the certainty of a pension.
Contracting work also tends to be less predictable, with jobs often tied to the length of a project or the availability of funding.
When it Makes Sense to Make the Move
The shift from federal service to a contracting role typically works best for Feds in mid-career or later, when higher pay can outweigh the value of remaining federal benefits. It’s easier to make this transition if you already have a solid retirement savings base and don’t rely heavily on future FERS accruals.
Contracting draws people who want flexibility, diverse projects, and control over their schedules. They're willing to trade the stability of a long federal career for those benefits. It also attracts professionals who want to use their federal expertise in new ways without staying locked into one agency.
The appeal is clear: more options, fewer constraints.
Before making the switch, look closely at your timing. Pension vesting, FERS service credit, and FEHB eligibility in retirement can all shape your financial future.
Making the Call: Is Leaving Federal Service for Contracting Worth it?
Weigh the full financial and lifestyle trade-offs before leaving federal service for contracting. Consider what you may lose — such as your FERS pension and FEHB coverage — compared to the potential for higher income and broader professional opportunities.
Factor in possible gaps in health insurance and retirement savings, and how you’ll address them. Set a timeline and milestones. Build a cash buffer and lock down benefits. Move when the numbers work, not when frustration spikes or short-term pressures cloud your judgment.
Reach out to the team at Serving Those Who Serve at [email protected] for guidance tailored to your situation.
The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Serving Those Who Serve writers and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **
