How to calculate pension value?

[Anonymous]

Anonymous wrote:You don’t factor it into net worth and that is what dodo OP is attempting to do

Yes you do.

[Anonymous]

Anonymous wrote:Guessing OP is the author of the net worth post. Lame.

OP here - I am not the author of the net worth post FWIW.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why do you need to know your pension value for retirement planning? You don't need to know the value of your social security for example. All that matters is what you can expect to receive monthly from your pension, social security or other sources. Sounds to me like you want to count the value in your net worth, which is kind of pathetic.

+1

Plus many do not get inherited when you pass or at most only to a spouse

They can inherit his Roth and investments in taxable

Those are not pensions.

[Anonymous]

Anonymous wrote:

Anonymous wrote:A very rough estimate: your annual pension at age 58 is $78K. The present value of a $1 annuity at that age is somewhere around 20. So, at age 58, the value will be $78K x 20 =$1.56M. Discounts it back 17 years to now, at 4%, it’s about $800K.

An actuary.

There is no guarantee you will make it to 78 years of age. Why are you trying to value this when tomorrow is not promised. It's not like a 401 or IRA that is inheritable.

What do we ever truly own except the ground beneath our feet etc? I admire your approach, but would suggest that you stay off the money and finances board. Stick to cooking, religion etc.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You don’t factor it into net worth and that is what dodo OP is attempting to do

Yes you do.

No, you don't.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:A very rough estimate: your annual pension at age 58 is $78K. The present value of a $1 annuity at that age is somewhere around 20. So, at age 58, the value will be $78K x 20 =$1.56M. Discounts it back 17 years to now, at 4%, it’s about $800K.

An actuary.

There is no guarantee you will make it to 78 years of age. Why are you trying to value this when tomorrow is not promised. It's not like a 401 or IRA that is inheritable.

So many haters lol

Not a hater. Just stating facts. A person can live to the ripe old age of 99 and collect a pension for thirty-five years. Or an otherwise relatively healthy person can retire at 62 and have a massive heart attack and drop dead at 63, which is considered young for death. One year of pension received. Not a hater, just someone with personal experience and no that it is a wonderful benefit that cannot be inherited in whole. That is why it should not be calculated for 20 year future value. If you live to see old age, a pension is gravy.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:A very rough estimate: your annual pension at age 58 is $78K. The present value of a $1 annuity at that age is somewhere around 20. So, at age 58, the value will be $78K x 20 =$1.56M. Discounts it back 17 years to now, at 4%, it’s about $800K.

An actuary.

There is no guarantee you will make it to 78 years of age. Why are you trying to value this when tomorrow is not promised. It's not like a 401 or IRA that is inheritable.

What do we ever truly own except the ground beneath our feet etc? I admire your approach, but would suggest that you stay off the money and finances board. Stick to cooking, religion etc.

Why? I have been able to accumulate over 6million dollars for my retirement, and this is from a once poor kid who wore hand-me-downs to school. The pension is gravy. The retirement and brokerage accounts will go to my heirs. I think I know just a little bit about money. How about you.

And by the way, your post was extremely misogynistic. Too bad, that's all you think you and your daughters are good for, cooking. Jesus.

[Anonymous]

OP, don't think of retirement security as a number, but as an income stream.

Figure out how much income you will need in retirement. Say right now, your income is $60,000 and you are 45 years old.

Let's say you want to retire at age 60. You have calculated that your pension will be $35,000 per year, and your Social Security will be $15,000 per year.

If your income grows at 3% per year, your income at age 60 will be approx. $94,000. If you want to retire on 80% of your income, you will need an income of about $75,000 per year.

Your pension and Social Security will be $50,000 per year - so you will need enough retirement savings to bring in $25,000 per year.

This is a bit simplified, but shows you how to think it through - "net worth" does not tell you much compared to estimating your income needs.

[Anonymous]

Anonymous wrote:OP, don't think of retirement security as a number, but as an income stream.

Figure out how much income you will need in retirement. Say right now, your income is $60,000 and you are 45 years old.

Let's say you want to retire at age 60. You have calculated that your pension will be $35,000 per year, and your Social Security will be $15,000 per year.

If your income grows at 3% per year, your income at age 60 will be approx. $94,000. If you want to retire on 80% of your income, you will need an income of about $75,000 per year.

Your pension and Social Security will be $50,000 per year - so you will need enough retirement savings to bring in $25,000 per year.

This is a bit simplified, but shows you how to think it through - "net worth" does not tell you much compared to estimating your income needs.

OP - thanks that is helpful. In order to determine retirement income needed I assume we take out things like student loans, daycare, kids extra curriculars, mortgage (hopefully) and get down to the nitty gritty amount. We are currently spending closer to $30,000 a month all in but obviously hope that number goes down over time!

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, don't think of retirement security as a number, but as an income stream.

Figure out how much income you will need in retirement. Say right now, your income is $60,000 and you are 45 years old.

Let's say you want to retire at age 60. You have calculated that your pension will be $35,000 per year, and your Social Security will be $15,000 per year.

If your income grows at 3% per year, your income at age 60 will be approx. $94,000. If you want to retire on 80% of your income, you will need an income of about $75,000 per year.

Your pension and Social Security will be $50,000 per year - so you will need enough retirement savings to bring in $25,000 per year.

This is a bit simplified, but shows you how to think it through - "net worth" does not tell you much compared to estimating your income needs.

OP - thanks that is helpful. In order to determine retirement income needed I assume we take out things like student loans, daycare, kids extra curriculars, mortgage (hopefully) and get down to the nitty gritty amount. We are currently spending closer to $30,000 a month all in but obviously hope that number goes down over time!

Yup, lots of uncertainty in that and most other parts of the retirement calculations! But I think most people think of 80% of pre-retirement spending as the average to use for planning purposes.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:A very rough estimate: your annual pension at age 58 is $78K. The present value of a $1 annuity at that age is somewhere around 20. So, at age 58, the value will be $78K x 20 =$1.56M. Discounts it back 17 years to now, at 4%, it’s about $800K.

An actuary.

There is no guarantee you will make it to 78 years of age. Why are you trying to value this when tomorrow is not promised. It's not like a 401 or IRA that is inheritable.

So many haters lol

Not a hater. Just stating facts. A person can live to the ripe old age of 99 and collect a pension for thirty-five years. Or an otherwise relatively healthy person can retire at 62 and have a massive heart attack and drop dead at 63, which is considered young for death. One year of pension received. Not a hater, just someone with personal experience and no that it is a wonderful benefit that cannot be inherited in whole. That is why it should not be calculated for 20 year future value. If you live to see old age, a pension is gravy.

Please stop. You are just displaying your ignorance. Everyone understands that there is uncertainty and that you may live till 100 or die before your pension. But just because there is uncertainty doesn’t mean that you can’t put a value on something. Insurance companies do this every day when they sell annuities, hence this actuary is actually answering the question.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:A very rough estimate: your annual pension at age 58 is $78K. The present value of a $1 annuity at that age is somewhere around 20. So, at age 58, the value will be $78K x 20 =$1.56M. Discounts it back 17 years to now, at 4%, it’s about $800K.

An actuary.

There is no guarantee you will make it to 78 years of age. Why are you trying to value this when tomorrow is not promised. It's not like a 401 or IRA that is inheritable.

So many haters lol

Not a hater. Just stating facts. A person can live to the ripe old age of 99 and collect a pension for thirty-five years. Or an otherwise relatively healthy person can retire at 62 and have a massive heart attack and drop dead at 63, which is considered young for death. One year of pension received. Not a hater, just someone with personal experience and no that it is a wonderful benefit that cannot be inherited in whole. That is why it should not be calculated for 20 year future value. If you live to see old age, a pension is gravy.

Please stop. You are just displaying your ignorance. Everyone understands that there is uncertainty and that you may live till 100 or die before your pension. But just because there is uncertainty doesn’t mean that you can’t put a value on something. Insurance companies do this every day when they sell annuities, hence this actuary is actually answering the question.

Different poster here. The question is WHY put a value on it? For what purpose, exactly? You don't put a value on it for retirement planning except as an income stream, and a bank won't count it in any other way when considering you for a loan, etc. And it won't qualify you as a high net worth individual for investment purposes, etc. So WHY do you need to put a value on it other than to make yourself feel better?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:A very rough estimate: your annual pension at age 58 is $78K. The present value of a $1 annuity at that age is somewhere around 20. So, at age 58, the value will be $78K x 20 =$1.56M. Discounts it back 17 years to now, at 4%, it’s about $800K.

An actuary.

There is no guarantee you will make it to 78 years of age. Why are you trying to value this when tomorrow is not promised. It's not like a 401 or IRA that is inheritable.

So many haters lol

Not a hater. Just stating facts. A person can live to the ripe old age of 99 and collect a pension for thirty-five years. Or an otherwise relatively healthy person can retire at 62 and have a massive heart attack and drop dead at 63, which is considered young for death. One year of pension received. Not a hater, just someone with personal experience and no that it is a wonderful benefit that cannot be inherited in whole. That is why it should not be calculated for 20 year future value. If you live to see old age, a pension is gravy.

Please stop. You are just displaying your ignorance. Everyone understands that there is uncertainty and that you may live till 100 or die before your pension. But just because there is uncertainty doesn’t mean that you can’t put a value on something. Insurance companies do this every day when they sell annuities, hence this actuary is actually answering the question.

Okay Ms. Actuary, you win. Now please explain to OP what happens to that 1.5 million dollars you told her was the value of her pension in 17 years, and OP has a misfortune in health or death. OP and her family relied on that imaginary 1.5 million dollars value during their financial planning. If OP was just talking about herself, I might be taking a different position, but she keeps you the word "we", and that is important in her planning.

OP, you should really seek a financial planner and not rely on anonymous posters, including myself. There are too many factors. Pensions are like social security and should be considered income that is not always transferrable. It is future income to you with a term date. Talk to a financial advisor, preferably one who does not try to sell you their products.

[Anonymous]

I wouldn't trust state pensions in red states. If you are in a red state and you have a pension, don't count on them looking for you if the pension fund run into financial troubles.

[Anonymous]

New poster here. Why wouldn’t you mentally put a value on a pension? It seems a bit silly for everyone else to calculate/think about about their net worth, but families with $50-$100k+ in pension payments coming are supposed to mentally pretend that this has no cash value.

If both my spouse and I die without getting a chance to receive those pension payments, then that’s the way it goes (I’m guessing that I won’t care at that point, lol - and we have enough other savings that our children would still inherit a nice amount anyways). But while I’m alive, I’m including an estimate of our pension value in my own personal net worth calculations.