I wouldn't necessarily add pension in "net worth" but I'd certainly factor it in in terms of what I need for retirement. So I like the 4% shorthand.

Anonymous wrote:Except when you die, absent survivor benefits, the money is gone. So the 4% calculation is pretty far off.

You could also live longer than expected. But for purposes of figuring out your net worth on a Saturday afternoon, without consulting mortality tables or making 40 year predictions about Treasury rates and the solvency of the us government, the 4 percent shorthand isn't so bad.

Anonymous wrote:Wait a min! you can add the value of a pension to your net worth? If yes, then I'm not poor! Which means I have a positive net worth in the future?. I work for a private company. I'm 34 now, I used one of those future projection calculator with assistance from my pension office, I should have over 1 million lump
by 62 and I think 1.5 million by 65 from what they told me.

That was my reaction. Are we talking about pension or 401k nest egg?

Wait a min! you can add the value of a pension to your net worth? If yes, then I'm not poor! Which means I have a positive net worth in the future?. I work for a private company. I'm 34 now, I used one of those future projection calculator with assistance from my pension office, I should have over 1 million lump
by 62 and I think 1.5 million by 65 from what they told me.

Except when you die, absent survivor benefits, the money is gone. So the 4% calculation is pretty far off.

There are calculators and fancy ways of doing it. But if you just want to have a number for guiding your worth, one shorthand is to do a reverse of the 4 percent rule. So if you had a lump sum conservatively invested and spent it down at 4 percent, the classic recommendation, how big would that lump sum be to give you the same income stream? In your case 70k/.04 = 1.75m

It isn't an exact comparison - there is different risk associated with a fed pension vs savings (political vs investment), you have to consider whether you will pay for survivor benefits or not, and this doesn't take into account the fact that the pensions ARE different than savings in a lot of ways. But still a good shorthand.

Jumping on the net worth calculation bandwagon.

How do I add pension values into our net worth?

Between DH and I, we have current a combined current federal pension value of about $70K/year (meaning if we never worked another day and each started drawing at 62).