Value of pension in net worth calculation

[Anonymous]

Anonymous wrote:A private annuity is essentially a purchased pension. If I take $1 million from my IRA and convert it to a lifetime annuity, have I just lost $1 million? I don’t think so. If that were true, no one would buy an annuity. From an accounting perspective, how would the books balance if the annuity was valued at $0?

Is there ever a good reason to buy an annuity?

[Anonymous]

It plays into our calculations for saving, spending, and retirement. Because we expect c90k/year in pension (inflation adjusted) and 80k/yr in. Social security (though could be cut back?) it allows us to model other withdrawal strategies and give us a sense of what retirement will look like, whether we can sel inside for ltc, and eventually how much we can gift kids while we are alive. It also acts as a hedge in our investments, with a portion of guaranteed fixed income we are a little more aggressive than we would be if we didn’t have pension coming.

I would maybe value it in my networth if for some reason I needed to “prove” wealth for a mortgage or loan but otherwise who needs to know?

[Anonymous]

Anonymous wrote:It is not part of your networth if your family members can’t inherit it. Unless the pension has a lump sum cash out option, no reason to include it in net worth.

Tangent here based on PP’s comment: If you can be taxed on something, should it be counted? For example, you inherit a priceless 17th-century ivory something or other. You cannot legally sell it, but IRS taxes you anyway. Should that priceless ivory be part of your networth or does it fall into the same category as what the OP is asking?

[Anonymous]

Sincere question - why are you calculating networth at all?

[Anonymous]

Anonymous wrote:Sincere question - why are you calculating networth at all?

Because in some states you need to find ways to greatly diminish it as the Dems are looking for ways to tax it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:A private annuity is essentially a purchased pension. If I take $1 million from my IRA and convert it to a lifetime annuity, have I just lost $1 million? I don’t think so. If that were true, no one would buy an annuity. From an accounting perspective, how would the books balance if the annuity was valued at $0?

Is there ever a good reason to buy an annuity?

A friend bought one for his elderly parents to protect their savings from scammers.