How do you value a pension in your net worth?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous
three pages and still no one gives an answer...

No several have answered. 66k/year is equivalent to about 1.6 m in 401k

No way. That’s too high.

DP.

???

That's exactly what I would have calculated.

As a PP pointed out, a $75k/year annuity can be bought at $1M these days. So 66k/year should be less than $1M.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't think you will get Social Security plus a government pension.

That is correct for the old plan. There is a SS offset. I think you get some of it though.

With FERS and anyone who joined the government after 1984 has FERS, you get full SS plus pension. As an employee you are paying just as much in to SS as you would as a private sector employee

Yes. Also, if you retire under FERS before you are eligible for SS, you get a supplement to your pension until you are 62.

https://plan-your-federal-retirement.com/fers-supplement/#:~:text=Special%20Benefit%20for%20Some%20FERS%20Who%20Retire%20Before%20Age%2062&text=The%20FERS%20Supplement%20is%20also,until%20you%20reach%20age%2062.

This but you do not get the 10% multiplier (ever) or COLAS until you turn 62. The latter can be impactful over time.

Yes, but if you have enough, you have 5 years to do what you want to do instead of going to work. Some people don't need more $, but would love more time. That's the value of knowing how much is enough.

[Anonymous]

The value of a pension = Annual pension amount divided by a reasonable rate of return multiplied by a percentage probability the pension will be paid until death

Annual pension: $67,500

A reasonable rate of return divisor: 2.55%

Percentage probability of pension being paid until death: 95%

Value of pension = ($67,500 / 0.0255) X 0.95 = $2,514,706

[Anonymous]

Anonymous wrote:The value of a pension = Annual pension amount divided by a reasonable rate of return multiplied by a percentage probability the pension will be paid until death

Annual pension: $67,500

A reasonable rate of return divisor: 2.55%

Percentage probability of pension being paid until death: 95%

Value of pension = ($67,500 / 0.0255) X 0.95 = $2,514,706

By doing so, you're assuming one will never die, which is false.

[Anonymous]

Here you go. But it assumes you die at 85 years old

https://valueyourpension.com/

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous
three pages and still no one gives an answer...

No several have answered. 66k/year is equivalent to about 1.6 m in 401k

No way. That’s too high.

DP.

???

That's exactly what I would have calculated.

As a PP pointed out, a $75k/year annuity can be bought at $1M these days. So 66k/year should be less than $1M.

where? inflation adjusted w/ survivor benefits life FERS? i think not

[Anonymous]

Anonymous wrote:

Anonymous wrote:I don't think you will get Social Security plus a government pension.

That is correct for the old plan. There is a SS offset. I think you get some of it though.

They lowered the pension ages ago and now you get SS. Fed retirement is not what it was.

[Anonymous]

Anonymous wrote:The value of a pension = Annual pension amount divided by a reasonable rate of return multiplied by a percentage probability the pension will be paid until death

Annual pension: $67,500

A reasonable rate of return divisor: 2.55%

Percentage probability of pension being paid until death: 95%

Value of pension = ($67,500 / 0.0255) X 0.95 = $2,514,706

How did you pick the 2.55%? What is this the rate of return on?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't think you will get Social Security plus a government pension.

That is correct for the old plan. There is a SS offset. I think you get some of it though.

With FERS and anyone who joined the government after 1984 has FERS, you get full SS plus pension. As an employee you are paying just as much in to SS as you would as a private sector employee

Yes. Also, if you retire under FERS before you are eligible for SS, you get a supplement to your pension until you are 62.

https://plan-your-federal-retirement.com/fers-supplement/#:~:text=Special%20Benefit%20for%20Some%20FERS%20Who%20Retire%20Before%20Age%2062&text=The%20FERS%20Supplement%20is%20also,until%20you%20reach%20age%2062.

This but you do not get the 10% multiplier (ever) or COLAS until you turn 62. The latter can be impactful over time.

Yes, but if you have enough, you have 5 years to do what you want to do instead of going to work. Some people don't need more $, but would love more time. That's the value of knowing how much is enough.

I know, but you would also be shocked how many people do not understand that they won’t get the multiplier at 62 or the COLAs till after 62. A surprising number aren’t that attuned to the nuances of selecting early retirement.

[Anonymous]

It is a simple present value calculation. You can do this in seconds in exel:

You can find out the number of years you are expected to live from an actuarial table.

You need a discount rate - e.g. the 10 year treasury yield, 4.2 percent.

Then you project the future pension payments for the number of years you are expected to live, increasing by inflation (e.g. 2.5 percent) each year if it is cola'd.

Then you just calculate =npv(4.2%, the stream of payments). And that will give you a reasonable answer.

[Anonymous]

Excellent article on this topic:
https://www.journalofaccountancy.com/issues/2022/apr/helping-retiremen-plan-participants-understand-net-worth.html

[Anonymous]

Anonymous wrote:Here you go. But it assumes you die at 85 years old

https://valueyourpension.com/

Note: this is a pay service, which you only find out after you have provided a fair amount of information.

[Anonymous]

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

[Anonymous]

There's no reason to add your pension or expected social security to your net worth. Just deduct them from the income you calculate you need in retirement. They're not liquid assets.

[Anonymous]

Anonymous wrote:There's no reason to add your pension or expected social security to your net worth. Just deduct them from the income you calculate you need in retirement. They're not liquid assets.

Non liquid assets are assets too and should be part of your net worth. They're just not transferrable. But they're assets nonetheless.