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Reply to "Value of pension in net worth calculation"
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[quote=Anonymous][quote=Anonymous]If you have a pension, do you include the value of the vested benefit in your net worth calculation? We are not overly conservative meaning we typically include the estimated value of our home minus existing mortgage in our calculation.[/quote] As others pointed out, the value of assets in retirement is their ability to generate income. A pension is already doing that. Rule of thumb, treat it like an annuity that pays the same amount as a pension. For example, if your pension is $50K/year, divide that by 6% to get it's present value ($833K). This asset will disappear or greatly diminish in value when you die.. or disappear. Haven't checked annuities lately, but if the return is 8%, change the present value accordingly. There are sites that can help with that.[/quote]
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