How to value a military pension into NW

[Anonymous]

I’m a 51 yo who just retired from the Navy as an O-6 naval aviator after 29 years of service. Does anyone know how to value a military pension with COLA into a Net Worth calculation? Various websites out there with suggestions on how to do this (lump sum, TIPs model, annuity comparison) and obviously you have to make assumptions about your longevity but was wondering if any of the military retirees on DCUM had a formula that “worked” for them. TIA

[Anonymous]

Is there some specific reason? Generally, you just discount the annual cash flows by the risk-free rate (ie treasury rates) over some time period. 10 year treasury rate is probably good.

Is this to determine if you should take something lump sum vs annual pension?

[Anonymous]

Anonymous wrote:Is there some specific reason? Generally, you just discount the annual cash flows by the risk-free rate (ie treasury rates) over some time period. 10 year treasury rate is probably good.

Is this to determine if you should take something lump sum vs annual pension?

NP here but sometimes it's useful as a way of checking in on your non-pension vehicle targets. Like if the retirement we need would usually require 5 million in assets in retirement accounts, and we can estimate my DH's pension as worth 2 million at age 55, that gives us a sense of what we need in 401ks, IRAs, etc., in order to hit our target.

We can do it your way to evaluate specific lifestyle choices and affordability, but sometimes we want to do some benchmarking to see how we are doing generally.

[Anonymous]

We don’t but the pension is minimal as enlisted.

[Anonymous]

Anonymous wrote:I’m a 51 yo who just retired from the Navy as an O-6 naval aviator after 29 years of service. Does anyone know how to value a military pension with COLA into a Net Worth calculation? Various websites out there with suggestions on how to do this (lump sum, TIPs model, annuity comparison) and obviously you have to make assumptions about your longevity but was wondering if any of the military retirees on DCUM had a formula that “worked” for them. TIA

On another note, you missed the hiring wave.

You be a senior wide body FO or mid-range narrow body CA if you separated at 20.

[Anonymous]

To get a rough idea, you can use this annuity calculator.

https://www.calculatorsoup.com/calculators/financial/present-value-annuity-calculator.php

I ran the annuity at 30 years, 0% interest, $100,000 payment increasing at 3% a year (for the COLA inflation protection), and it calculated a present value of $3,000,000.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I’m a 51 yo who just retired from the Navy as an O-6 naval aviator after 29 years of service. Does anyone know how to value a military pension with COLA into a Net Worth calculation? Various websites out there with suggestions on how to do this (lump sum, TIPs model, annuity comparison) and obviously you have to make assumptions about your longevity but was wondering if any of the military retirees on DCUM had a formula that “worked” for them. TIA

On another note, you missed the hiring wave.

You be a senior wide body FO or mid-range narrow body CA if you separated at 20.

Get yourself over to PPRuNe for this kind of discussion.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I’m a 51 yo who just retired from the Navy as an O-6 naval aviator after 29 years of service. Does anyone know how to value a military pension with COLA into a Net Worth calculation? Various websites out there with suggestions on how to do this (lump sum, TIPs model, annuity comparison) and obviously you have to make assumptions about your longevity but was wondering if any of the military retirees on DCUM had a formula that “worked” for them. TIA

On another note, you missed the hiring wave.

You be a senior wide body FO or mid-range narrow body CA if you separated at 20.

They still have an airline job waiting if they want it.

[Anonymous]

Anonymous wrote:I’m a 51 yo who just retired from the Navy as an O-6 naval aviator after 29 years of service. Does anyone know how to value a military pension with COLA into a Net Worth calculation? Various websites out there with suggestions on how to do this (lump sum, TIPs model, annuity comparison) and obviously you have to make assumptions about your longevity but was wondering if any of the military retirees on DCUM had a formula that “worked” for them. TIA

https://valueyourpension.com/life-expectancy-present-value-calculator/

[Anonymous]

Why are you asking? Can you live off of it? Otherwise it’s an income source or savings plus health care for life. Take the annuity if you are married or young kids in case you pass first so it goes to them.

[Anonymous]

Annual monetary worth of the Healthcare and pension as though it were a dividend. I'd guesstimate 700K-900K

[Anonymous]

Anonymous wrote:Is there some specific reason? Generally, you just discount the annual cash flows by the risk-free rate (ie treasury rates) over some time period. 10 year treasury rate is probably good.

Is this to determine if you should take something lump sum vs annual pension?

OP here. It’s a pension paid monthly.

[Anonymous]

Anonymous wrote:To get a rough idea, you can use this annuity calculator.

https://www.calculatorsoup.com/calculators/financial/present-value-annuity-calculator.php

I ran the annuity at 30 years, 0% interest, $100,000 payment increasing at 3% a year (for the COLA inflation protection), and it calculated a present value of $3,000,000.

OP here, that’s about what I came up with on my own. Thanks.

[Anonymous]

The great thing about a solid government pension is that you don’t need any conservative bond exposure in the rest of your investments. You can pretty much go fully into equities for the next 20 years and reap larger returns than the Average Joe without a pension.

[Anonymous]

Anonymous wrote:The great thing about a solid government pension is that you don’t need any conservative bond exposure in the rest of your investments. You can pretty much go fully into equities for the next 20 years and reap larger returns than the Average Joe without a pension.

I am in this position and totally agree! It is a relief to not have to deal with bonds: Equities seem so much easier to understand.