Value of pension in net worth calculation

[Anonymous]

It doesn't matter what other people say. I would count your net worth as an asset that supplements your pension. Retirement is ultimately about cash flow and not net worth. Your net worth can fluctuate a lot on an annual basis, so that number doesn't really mean much.

But obviously your kids can't inherit your pension, so its value is zero for estate planning purposes.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes, pensions eventually die, but to the degree that they preserve withdrawals of other assets, they increase that wealth. So, yes, pensions are an asset, but their lifetime is uncertain. Of course, you can calculate a value based one’s life expectancy or you can think of its value as the growth of other assets that would have otherwise reduced to support your current living.

Bullshit. That's like saying if I spend less money in retirement than my 401k would permit it's an "asset." That's not how it works.

NP here....you sound bitter. I don't have a pension but I know someone who gets about $70K per year pension inflation adjusted and with survivor benefit. I see it as an asset as it pays out $$ which could be close to $2m for this person who is only aged 55. I sure wish I had it myself.

Not bitter at all. But it's not an asset for net worth purposes.

Of course its an asset, and PP does sound bitter. But agree with others that the way to "value" it is to consider it as a contributor to income in retirement that will offset the need for other savings.

[Anonymous]

My pension involves survivor benefits paid to designated beneficiaries as either a lump-sum refund of contributions or a lifetime monthly payment since I am vested. With that being said, I don’t count SS or my pension towards my net worth, but understand why someone might.

[Anonymous]

Couldn’t it be included if you have a cash out option and in fact plan to take the lump sum distribution?

[Anonymous]

What the pension most figures into is looking at the rest of what you have for retirement and figuring out how that will work for you. I am close to retirement but I haven’t moved my TSP funds into “less risky” categories, because my pension will cover my basic needs and represents the “safe” part of my retirement portfolio. The market takes a dip and it doesn’t hurt me that badly. So I look at how to withdraw from TSP and other investments and I’m only looking at withdrawing maybe half of what others would do if all their retirement had to come out of their 401k. Let’s say I’m only looking to find $75k where others may be looking to find $150k.

[Anonymous]

Anonymous wrote:Couldn’t it be included if you have a cash out option and in fact plan to take the lump sum distribution?

It should be included, period. The argument that it should not is painfully amateurish.

[Anonymous]

Anonymous wrote:It doesn't matter what other people say. I would count your net worth as an asset that supplements your pension. Retirement is ultimately about cash flow and not net worth. Your net worth can fluctuate a lot on an annual basis, so that number doesn't really mean much.

But obviously your kids can't inherit your pension, so its value is zero for estate planning purposes.

That depends on some pension plans. For example, a federal or some state LEO pensions in which the pensioner elected survivor benefit rights would provide a tiny monthly distribution to a surviving dependent child under the age of 22, as long as the child is a full-time student. My DS receives approximately $440 a month from my late DH's $98k pension. I receive 40% of his late pension. I'd rather not receive anything and for him to be here with me. I digress. To the OP, I don't consider it assets, but rather income. DH also considered it income because upon his death, the family income dropped immediately.

[Anonymous]

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

If you are doing net worth for retirement planning then a pension is about cash flow. If you just want to see how much it’s worth (as a benefit from your employer) use the calculator above which calculates the current value of a future pension. You need to enter the data like you quit your job today (thats what you’ve earned so far) and start collecting at some future date when payouts actually start. If you are not vested yet then the current value is 0.

[Anonymous]

No, but we include it as part of our financial forecast to spend or preferably reinvest.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes, pensions eventually die, but to the degree that they preserve withdrawals of other assets, they increase that wealth. So, yes, pensions are an asset, but their lifetime is uncertain. Of course, you can calculate a value based one’s life expectancy or you can think of its value as the growth of other assets that would have otherwise reduced to support your current living.

Bullshit. That's like saying if I spend less money in retirement than my 401k would permit it's an "asset." That's not how it works.

NP here....you sound bitter. I don't have a pension but I know someone who gets about $70K per year pension inflation adjusted and with survivor benefit. I see it as an asset as it pays out $$ which could be close to $2m for this person who is only aged 55. I sure wish I had it myself.

Not bitter at all. But it's not an asset for net worth purposes.

Of course its an asset, and PP does sound bitter. But agree with others that the way to "value" it is to consider it as a contributor to income in retirement that will offset the need for other savings.

That's not the definition of an "asset" though.

For example, when you apply for a mortgage, the bank won't consider your pension or social security as an asset. It will consider it to be an income stream that's no different than your salary. Because that's all it is.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Couldn’t it be included if you have a cash out option and in fact plan to take the lump sum distribution?

It should be included, period. The argument that it should not is painfully amateurish.

You're clearly not a financial professional.

[Anonymous]

No, I just include what is somewhat liquid including my home.

[Anonymous]

I don't put the pension in my net worth, but when I calculate the amount my estate will grow to, it increases it greatly, so it impacts my planning (and how early I feel we can retire) greatly.

[Anonymous]

Wife and I receive about $170k annually - local govt pension. It is inflation adjusted with survivor benefits. We don’t count it towards NW but to us it’s priceless in terms of what is provides - a peace of mind via guaranteed lifetime income security. Would never trade it for large lump sump.

[Anonymous]

Wife and I receive about $170k annually - local govt pension. It is inflation adjusted with survivor benefits. We don’t count it towards NW but to us it’s priceless in terms of what is provides - a peace of mind via guaranteed lifetime income security. Would never trade it for large lump sump.

Who are the survivors? Do you mean your wife?