Anonymous wrote:Why does everyone give every poster such a hard time no matter what the question? It's not a dumb question.

OP, we have a goal for what our financial assets should be by the time we retire in 4 years. We do count the value of my husband's pension in the goal. If we didn't, we'd be scrambling to find another $500K and feeling a little panicky about it. We don't need to do that.

There are several easy-to-find calculators online.

How would you use that information? I don't understand why you would panic based on "financial asset" figure.

Why does everyone give every poster such a hard time no matter what the question? It's not a dumb question.

OP, we have a goal for what our financial assets should be by the time we retire in 4 years. We do count the value of my husband's pension in the goal. If we didn't, we'd be scrambling to find another $500K and feeling a little panicky about it. We don't need to do that.

There are several easy-to-find calculators online.

Anonymous wrote:

Anonymous wrote:Cash flow matters more than net worth. You might want to model out pension payments, future social security payments, RMDs, taxes, IRMAA penalties, etc.

This x100.

What you need to do is replace your salary. We’ve all been forced into a situation where we need to save a lump sum to generate a stream of income so we need ways to estimate how large a sum we need for a given level of income but its entirely backwards to take an income stream and convert it to a lump sum.

Most people don't need to replace their salary. Most people needed to use part of their salary to save for retirement, pay for child-related expenses, save for college, and pay a mortgage, and most retirees don't need to do any of that.

Of course, circumstances vary, so you need to figure out that your individual situation is. If you're still paying off the mortgage, helping kids, or taking lots of luxury vacations, then you'll need more money.

Anonymous wrote:I don’t factor in SS. I am 40, so it will be gone or at least means-tested by then. If I get it, great and I will gladly spend it. But I can’t count on it to be there even though I will pay into it with large amounts for decades.

Same. We are 60. If we get SS it great. If not, so be it. DH has paid into SS, but I did not vest enough years.

In our retirement planning we basically looked at the following -

- How much money is coming in through pension and investment earnings?
- What are our expenses and taxes? What kind of lifestyle will we have - outsourced help? international travel?
- What kind of healthcare we will need.
- What other obligations we have pending - (college for kids? their weddings? eldercare? other dependents? health conditions)

We have not counted on - SS, any inheritance. We do not count our home or other equity in our net-worth for the purpose of retirement. For us, it is strictly cash. We will just be spending the interest - if that.

We do not plan to get into long term assisted living on our own dime in US. If need be, we will move to our country of origin for care. We plan to age in place. We plan to install elevators in our home and also have cleaning service, lawn service, part time cooks and attendants for our needs.

We plan to give the maximum monetary gifts we can give each year to both kids. We are agreeable to buy homes with our two kids.

Anonymous wrote:I don’t factor in SS. I am 40, so it will be gone or at least means-tested by then. If I get it, great and I will gladly spend it. But I can’t count on it to be there even though I will pay into it with large amounts for decades.

It's not going to zero. If you're upper income and 40, it's possible that it will be reduced by 20-30 percent, and it might be taxed more. But even cutting it by 50 percent is extremely conservative. Assuming it will be cut by 100 percent is just nonsensical.

This is not complicated

Anonymous wrote:Cash flow matters more than net worth. You might want to model out pension payments, future social security payments, RMDs, taxes, IRMAA penalties, etc.

This x100.

What you need to do is replace your salary. We’ve all been forced into a situation where we need to save a lump sum to generate a stream of income so we need ways to estimate how large a sum we need for a given level of income but its entirely backwards to take an income stream and convert it to a lump sum.

Google says "A $50,000 per year pension is roughly equivalent to having a lump sum of $1,250,000 to $1,666,667, assuming a 3-4% withdrawal rate. This is based on the idea that a retiree can safely withdraw 3-4% of their savings annually to cover living expenses without depleting their principal." but you really shouldn't include in your asset est

What a silly question, OP. Every retirement planner app and/or advisor simply has you add your expected pension and/or Social Security amounts to the calculation and present it to you as part of your cash flow in the analysis. It’s very simple.

It sounds like you want to include it as part of your “net worth“ to make yourself feel a little richer. Don’t be so insecure.

Anonymous wrote:I value both pension and social security as a cash flow amount. You are saving $ now so that you can spend it in retirement. You should have some estimate of expenses in retirement, let's say $150k a year. If you have a pension of $60k, and then social security of $40k, you will only have to fund $50k of retirement expenses from your savings. Therefore it doesn't make sense to turn either amount into an imaginary lump sum amount. Unless you plan on taking a lump sum distribution from your pension instead of the annuity.

We are retired/retiring this year and above is what we do. Cash flow numbers but not as NW or assets.

I don’t factor in SS. I am 40, so it will be gone or at least means-tested by then. If I get it, great and I will gladly spend it. But I can’t count on it to be there even though I will pay into it with large amounts for decades.

Cash flow matters more than net worth. You might want to model out pension payments, future social security payments, RMDs, taxes, IRMAA penalties, etc.

The pension may have a current payout value or you can run an annuity calculator that would pay the same amount in the same circumstances (spousal benefit?, indexed to inflation, years of payout, etc.)

The problem is that it depends who manages the pension. Public pensions are pretty stable. Private pensions can be much less so.

I value both pension and social security as a cash flow amount. You are saving $ now so that you can spend it in retirement. You should have some estimate of expenses in retirement, let's say $150k a year. If you have a pension of $60k, and then social security of $40k, you will only have to fund $50k of retirement expenses from your savings. Therefore it doesn't make sense to turn either amount into an imaginary lump sum amount. Unless you plan on taking a lump sum distribution from your pension instead of the annuity.

How do you (if at all) value a pension when calculating your retirement assets? Also, do you factor in social security?