Anonymous
10/08/2025 20:31
Subject: How to calculate pension value?
Anonymous wrote:Anonymous wrote:Anonymous wrote:New poster here. Why wouldn’t you mentally put a value on a pension? It seems a bit silly for everyone else to calculate/think about about their net worth, but families with $50-$100k+ in pension payments coming are supposed to mentally pretend that this has no cash value.
If both my spouse and I die without getting a chance to receive those pension payments, then that’s the way it goes (I’m guessing that I won’t care at that point, lol - and we have enough other savings that our children would still inherit a nice amount anyways). But while I’m alive, I’m including an estimate of our pension value in my own personal net worth calculations.
For what purpose? To feel richer? To compete with others? Should I do the same with social security?
NP. Why do you care? Why do you assume it's to compete or feel rich? You're projecting your own insecurities and character failings onto OP.
I also assign a value to my husband's pension. Because so much of what I read about retirement is "you should $x in assets by this age if you have x, y, and z." To track our progress against this kind of advice, it's helpful for me to know the asset value of that income. Otherwise, I'm perpetually coming up $1M short in my asset projections.
Well, first of all, the OP immediately agreed they were thinking about it all wrong when it was explained to them. So the OP is reasonable.
But you, on the other hand, are too dense or ill informed to do that. Have you actual done any real financial planning or met with a real advisor? Because what you're "reading" is sophomoric. That's not how any professional would advise you.
Anonymous
10/08/2025 20:25
Subject: How to calculate pension value?
Anonymous wrote:Anonymous wrote:New poster here. Why wouldn’t you mentally put a value on a pension? It seems a bit silly for everyone else to calculate/think about about their net worth, but families with $50-$100k+ in pension payments coming are supposed to mentally pretend that this has no cash value.
If both my spouse and I die without getting a chance to receive those pension payments, then that’s the way it goes (I’m guessing that I won’t care at that point, lol - and we have enough other savings that our children would still inherit a nice amount anyways). But while I’m alive, I’m including an estimate of our pension value in my own personal net worth calculations.
For what purpose? To feel richer? To compete with others? Should I do the same with social security?
NP. Why do you care? Why do you assume it's to compete or feel rich? You're projecting your own insecurities and character failings onto OP.
I also assign a value to my husband's pension. Because so much of what I read about retirement is "you should $x in assets by this age if you have x, y, and z." To track our progress against this kind of advice, it's helpful for me to know the asset value of that income. Otherwise, I'm perpetually coming up $1M short in my asset projections.
Anonymous
10/08/2025 20:22
Subject: How to calculate pension value?
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:A very rough estimate: your annual pension at age 58 is $78K. The present value of a $1 annuity at that age is somewhere around 20. So, at age 58, the value will be $78K x 20 =$1.56M. Discounts it back 17 years to now, at 4%, it’s about $800K.
An actuary.
There is no guarantee you will make it to 78 years of age. Why are you trying to value this when tomorrow is not promised. It's not like a 401 or IRA that is inheritable.
So many haters lol
Not a hater. Just stating facts. A person can live to the ripe old age of 99 and collect a pension for thirty-five years. Or an otherwise relatively healthy person can retire at 62 and have a massive heart attack and drop dead at 63, which is considered young for death. One year of pension received. Not a hater, just someone with personal experience and no that it is a wonderful benefit that cannot be inherited in whole. That is why it should not be calculated for 20 year future value. If you live to see old age, a pension is gravy.
Please stop. You are just displaying your ignorance. Everyone understands that there is uncertainty and that you may live till 100 or die before your pension. But just because there is uncertainty doesn’t mean that you can’t put a value on something. Insurance companies do this every day when they sell annuities, hence this actuary is actually answering the question.
Different poster here. The question is WHY put a value on it? For what purpose, exactly? You don't put a value on it for retirement planning except as an income stream, and a bank won't count it in any other way when considering you for a loan, etc. And it won't qualify you as a high net worth individual for investment purposes, etc. So WHY do you need to put a value on it other than to make yourself feel better?
Why do you (or other posters) need to know why OP wants to know the value of a pension as an asset? What does it matter? It's a perfectly answerable question. Answering questions with "that's not the right question to ask" is insufferable.
Because the OP made clear that he wanted to know so he could figure out whether he had enough saved for retirement and that's not how it works. As any financial planner would tell you, first you figure out what your estimated expenses will be, then you calculate what your income stream in retirement will be -- pensions, social security, rents, etc. -- and then you calculate what you need to have saved to close the gap, if any, between expenses and income stream. The "value" of the pension is irrelevant.
Anonymous
10/08/2025 20:15
Subject: How to calculate pension value?
Anonymous wrote:New poster here. Why wouldn’t you mentally put a value on a pension? It seems a bit silly for everyone else to calculate/think about about their net worth, but families with $50-$100k+ in pension payments coming are supposed to mentally pretend that this has no cash value.
If both my spouse and I die without getting a chance to receive those pension payments, then that’s the way it goes (I’m guessing that I won’t care at that point, lol - and we have enough other savings that our children would still inherit a nice amount anyways). But while I’m alive, I’m including an estimate of our pension value in my own personal net worth calculations.
For what purpose? To feel richer? To compete with others? Should I do the same with social security?
Anonymous
10/08/2025 19:42
Subject: How to calculate pension value?
I agree with the actuary. The PV of this pension is about $800k.
Here’s how you get that. In 17 years, at age 57, you’ll get a pension of $78k/year. That amount will increase 2%/year. Assume the 30-year treasury rate for growth during the 30 year payout. Assuming the pension is received for 30 years (until 87), the PV is about $1.6 million.
However, that is the value of the 30 years of payments at the start of the pension, or at 57 years old. To understand what $1.6million is worth today, we have to discount it at the risk-free/government bond rate for 17 years. When you do that, the value of the pension today is about $800k, or half of its value 17 years from now.
Another way of understanding that: if you received $800k today and invested it in long-term treasury bonds for 17 years, you’d have $1.6 million in 17 years. Then , you could purchase an annuity for $1.6 million that would generate the income stream outlined.
Here’s how you get that. In 17 years, at age 57, you’ll get a pension of $78k/year. That amount will increase 2%/year. Assume the 30-year treasury rate for growth during the 30 year payout. Assuming the pension is received for 30 years (until 87), the PV is about $1.6 million.
However, that is the value of the 30 years of payments at the start of the pension, or at 57 years old. To understand what $1.6million is worth today, we have to discount it at the risk-free/government bond rate for 17 years. When you do that, the value of the pension today is about $800k, or half of its value 17 years from now.
Another way of understanding that: if you received $800k today and invested it in long-term treasury bonds for 17 years, you’d have $1.6 million in 17 years. Then , you could purchase an annuity for $1.6 million that would generate the income stream outlined.
Anonymous
10/08/2025 17:35
Subject: How to calculate pension value?
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:A very rough estimate: your annual pension at age 58 is $78K. The present value of a $1 annuity at that age is somewhere around 20. So, at age 58, the value will be $78K x 20 =$1.56M. Discounts it back 17 years to now, at 4%, it’s about $800K.
An actuary.
There is no guarantee you will make it to 78 years of age. Why are you trying to value this when tomorrow is not promised. It's not like a 401 or IRA that is inheritable.
So many haters lol
Not a hater. Just stating facts. A person can live to the ripe old age of 99 and collect a pension for thirty-five years. Or an otherwise relatively healthy person can retire at 62 and have a massive heart attack and drop dead at 63, which is considered young for death. One year of pension received. Not a hater, just someone with personal experience and no that it is a wonderful benefit that cannot be inherited in whole. That is why it should not be calculated for 20 year future value. If you live to see old age, a pension is gravy.
Please stop. You are just displaying your ignorance. Everyone understands that there is uncertainty and that you may live till 100 or die before your pension. But just because there is uncertainty doesn’t mean that you can’t put a value on something. Insurance companies do this every day when they sell annuities, hence this actuary is actually answering the question.
Different poster here. The question is WHY put a value on it? For what purpose, exactly? You don't put a value on it for retirement planning except as an income stream, and a bank won't count it in any other way when considering you for a loan, etc. And it won't qualify you as a high net worth individual for investment purposes, etc. So WHY do you need to put a value on it other than to make yourself feel better?
For shits and giggles?
Why do you care? Maybe out of curiosity, who knows?
Maybe you don't have a pension and are jealous lol
Anonymous
10/08/2025 16:18
Subject: How to calculate pension value?
Anonymous wrote:New poster here. Why wouldn’t you mentally put a value on a pension? It seems a bit silly for everyone else to calculate/think about about their net worth, but families with $50-$100k+ in pension payments coming are supposed to mentally pretend that this has no cash value.
If both my spouse and I die without getting a chance to receive those pension payments, then that’s the way it goes (I’m guessing that I won’t care at that point, lol - and we have enough other savings that our children would still inherit a nice amount anyways). But while I’m alive, I’m including an estimate of our pension value in my own personal net worth calculations.
But to what end is your "personal net worth calculation"? If it is to be proud of yourself or for bragging purposes, fine, go ahead and count it. But if you are trying to figure it out for practical, retirement planning purposes, then the cash flow approach that PP suggests above is the way to do it.
Anonymous
10/08/2025 16:15
Subject: How to calculate pension value?
Anonymous wrote:Anonymous wrote:Anonymous wrote:OP, don't think of retirement security as a number, but as an income stream.
Figure out how much income you will need in retirement. Say right now, your income is $60,000 and you are 45 years old.
Let's say you want to retire at age 60. You have calculated that your pension will be $35,000 per year, and your Social Security will be $15,000 per year.
If your income grows at 3% per year, your income at age 60 will be approx. $94,000. If you want to retire on 80% of your income, you will need an income of about $75,000 per year.
Your pension and Social Security will be $50,000 per year - so you will need enough retirement savings to bring in $25,000 per year.
This is a bit simplified, but shows you how to think it through - "net worth" does not tell you much compared to estimating your income needs.
OP - thanks that is helpful. In order to determine retirement income needed I assume we take out things like student loans, daycare, kids extra curriculars, mortgage (hopefully) and get down to the nitty gritty amount. We are currently spending closer to $30,000 a month all in but obviously hope that number goes down over time!
What are you spending $30 a month on?!?!
OP - mortgage, utilities, student loans, 529 savings, retirement savings, insurance, car payment, parochial school take up most of that $30,000. Then add on extras for 3 kids you end up getting close to $30,000 a month.
Anonymous
10/08/2025 16:04
Subject: How to calculate pension value?
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:A very rough estimate: your annual pension at age 58 is $78K. The present value of a $1 annuity at that age is somewhere around 20. So, at age 58, the value will be $78K x 20 =$1.56M. Discounts it back 17 years to now, at 4%, it’s about $800K.
An actuary.
There is no guarantee you will make it to 78 years of age. Why are you trying to value this when tomorrow is not promised. It's not like a 401 or IRA that is inheritable.
So many haters lol
Not a hater. Just stating facts. A person can live to the ripe old age of 99 and collect a pension for thirty-five years. Or an otherwise relatively healthy person can retire at 62 and have a massive heart attack and drop dead at 63, which is considered young for death. One year of pension received. Not a hater, just someone with personal experience and no that it is a wonderful benefit that cannot be inherited in whole. That is why it should not be calculated for 20 year future value. If you live to see old age, a pension is gravy.
Please stop. You are just displaying your ignorance. Everyone understands that there is uncertainty and that you may live till 100 or die before your pension. But just because there is uncertainty doesn’t mean that you can’t put a value on something. Insurance companies do this every day when they sell annuities, hence this actuary is actually answering the question.
Different poster here. The question is WHY put a value on it? For what purpose, exactly? You don't put a value on it for retirement planning except as an income stream, and a bank won't count it in any other way when considering you for a loan, etc. And it won't qualify you as a high net worth individual for investment purposes, etc. So WHY do you need to put a value on it other than to make yourself feel better?
Why do you (or other posters) need to know why OP wants to know the value of a pension as an asset? What does it matter? It's a perfectly answerable question. Answering questions with "that's not the right question to ask" is insufferable.
DP but OP says they are doing some financial planning to see if their retirement savings are on track and I think it’s fine/helpful to point out that there are more useful ways to assess that than by trying to calculate the npv of a pension.
If someone asks me the best brand of cat food to feed their dog I think it is ok to ask why they aren’t buying dog food.
Anonymous
10/08/2025 15:47
Subject: How to calculate pension value?
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:A very rough estimate: your annual pension at age 58 is $78K. The present value of a $1 annuity at that age is somewhere around 20. So, at age 58, the value will be $78K x 20 =$1.56M. Discounts it back 17 years to now, at 4%, it’s about $800K.
An actuary.
There is no guarantee you will make it to 78 years of age. Why are you trying to value this when tomorrow is not promised. It's not like a 401 or IRA that is inheritable.
So many haters lol
Not a hater. Just stating facts. A person can live to the ripe old age of 99 and collect a pension for thirty-five years. Or an otherwise relatively healthy person can retire at 62 and have a massive heart attack and drop dead at 63, which is considered young for death. One year of pension received. Not a hater, just someone with personal experience and no that it is a wonderful benefit that cannot be inherited in whole. That is why it should not be calculated for 20 year future value. If you live to see old age, a pension is gravy.
Please stop. You are just displaying your ignorance. Everyone understands that there is uncertainty and that you may live till 100 or die before your pension. But just because there is uncertainty doesn’t mean that you can’t put a value on something. Insurance companies do this every day when they sell annuities, hence this actuary is actually answering the question.
Different poster here. The question is WHY put a value on it? For what purpose, exactly? You don't put a value on it for retirement planning except as an income stream, and a bank won't count it in any other way when considering you for a loan, etc. And it won't qualify you as a high net worth individual for investment purposes, etc. So WHY do you need to put a value on it other than to make yourself feel better?
Why do you (or other posters) need to know why OP wants to know the value of a pension as an asset? What does it matter? It's a perfectly answerable question. Answering questions with "that's not the right question to ask" is insufferable.
Anonymous
10/08/2025 14:17
Subject: How to calculate pension value?
Anonymous wrote:Anonymous wrote:Anonymous wrote:OP, don't think of retirement security as a number, but as an income stream.
Figure out how much income you will need in retirement. Say right now, your income is $60,000 and you are 45 years old.
Let's say you want to retire at age 60. You have calculated that your pension will be $35,000 per year, and your Social Security will be $15,000 per year.
If your income grows at 3% per year, your income at age 60 will be approx. $94,000. If you want to retire on 80% of your income, you will need an income of about $75,000 per year.
Your pension and Social Security will be $50,000 per year - so you will need enough retirement savings to bring in $25,000 per year.
This is a bit simplified, but shows you how to think it through - "net worth" does not tell you much compared to estimating your income needs.
OP - thanks that is helpful. In order to determine retirement income needed I assume we take out things like student loans, daycare, kids extra curriculars, mortgage (hopefully) and get down to the nitty gritty amount. We are currently spending closer to $30,000 a month all in but obviously hope that number goes down over time!
What are you spending $30k a month on?!?!
Anonymous
10/08/2025 14:17
Subject: How to calculate pension value?
Anonymous wrote:Anonymous wrote:OP, don't think of retirement security as a number, but as an income stream.
Figure out how much income you will need in retirement. Say right now, your income is $60,000 and you are 45 years old.
Let's say you want to retire at age 60. You have calculated that your pension will be $35,000 per year, and your Social Security will be $15,000 per year.
If your income grows at 3% per year, your income at age 60 will be approx. $94,000. If you want to retire on 80% of your income, you will need an income of about $75,000 per year.
Your pension and Social Security will be $50,000 per year - so you will need enough retirement savings to bring in $25,000 per year.
This is a bit simplified, but shows you how to think it through - "net worth" does not tell you much compared to estimating your income needs.
OP - thanks that is helpful. In order to determine retirement income needed I assume we take out things like student loans, daycare, kids extra curriculars, mortgage (hopefully) and get down to the nitty gritty amount. We are currently spending closer to $30,000 a month all in but obviously hope that number goes down over time!
What are you spending $30 a month on?!?!
Anonymous
10/08/2025 14:16
Subject: How to calculate pension value?
Anonymous wrote:Anonymous wrote:OP, don't think of retirement security as a number, but as an income stream.
Figure out how much income you will need in retirement. Say right now, your income is $60,000 and you are 45 years old.
Let's say you want to retire at age 60. You have calculated that your pension will be $35,000 per year, and your Social Security will be $15,000 per year.
If your income grows at 3% per year, your income at age 60 will be approx. $94,000. If you want to retire on 80% of your income, you will need an income of about $75,000 per year.
Your pension and Social Security will be $50,000 per year - so you will need enough retirement savings to bring in $25,000 per year.
This is a bit simplified, but shows you how to think it through - "net worth" does not tell you much compared to estimating your income needs.
Recently retired and this is how I did our retirement planning years ago.
57 years old, no debt. Everything paid off (SFH, beach condo, large sailboat).
Monthly net income:
$6500 military pension (COLA adjusted)
$4000 dividends from taxable investments
$8500 available from CD ladder that will last until we turn 59.5 and then we can tap into various retirement accounts.
Our problem is that we way over saved. Like PP, I was born w nothing (neither parent graduated from high school). Started investing aggressively at age 21 upon college graduation. Still live fairly frugally (hard to change financial habits after a lifetime of living well below our means). I’ve had a couple of significant health scares, so aware that money isn’t everything and trying to enjoy life as each day comes. Will pass on significant assets to two sons and alma mater.
I forgot to add that our average monthly expenses are $7000. The biggest thing that helped me is tracking our expenses to the penny. That was the only way my spouse and I knew that we had plenty of cushion between income and expenses. We’ve got a separate savings account just in case of exceptional emergencies.
Anonymous
10/08/2025 14:06
Subject: How to calculate pension value?
Anonymous wrote:OP, don't think of retirement security as a number, but as an income stream.
Figure out how much income you will need in retirement. Say right now, your income is $60,000 and you are 45 years old.
Let's say you want to retire at age 60. You have calculated that your pension will be $35,000 per year, and your Social Security will be $15,000 per year.
If your income grows at 3% per year, your income at age 60 will be approx. $94,000. If you want to retire on 80% of your income, you will need an income of about $75,000 per year.
Your pension and Social Security will be $50,000 per year - so you will need enough retirement savings to bring in $25,000 per year.
This is a bit simplified, but shows you how to think it through - "net worth" does not tell you much compared to estimating your income needs.
Recently retired and this is how I did our retirement planning years ago.
57 years old, no debt. Everything paid off (SFH, beach condo, large sailboat).
Monthly net income:
$6500 military pension (COLA adjusted)
$4000 dividends from taxable investments
$8500 available from CD ladder that will last until we turn 59.5 and then we can tap into various retirement accounts.
Our problem is that we way over saved. Like PP, I was born w nothing (neither parent graduated from high school). Started investing aggressively at age 21 upon college graduation. Still live fairly frugally (hard to change financial habits after a lifetime of living well below our means). I’ve had a couple of significant health scares, so aware that money isn’t everything and trying to enjoy life as each day comes. Will pass on significant assets to two sons and alma mater.
Anonymous
10/08/2025 13:34
Subject: How to calculate pension value?
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:A very rough estimate: your annual pension at age 58 is $78K. The present value of a $1 annuity at that age is somewhere around 20. So, at age 58, the value will be $78K x 20 =$1.56M. Discounts it back 17 years to now, at 4%, it’s about $800K.
An actuary.
There is no guarantee you will make it to 78 years of age. Why are you trying to value this when tomorrow is not promised. It's not like a 401 or IRA that is inheritable.
So many haters lol
Not a hater. Just stating facts. A person can live to the ripe old age of 99 and collect a pension for thirty-five years. Or an otherwise relatively healthy person can retire at 62 and have a massive heart attack and drop dead at 63, which is considered young for death. One year of pension received. Not a hater, just someone with personal experience and no that it is a wonderful benefit that cannot be inherited in whole. That is why it should not be calculated for 20 year future value. If you live to see old age, a pension is gravy.
Please stop. You are just displaying your ignorance. Everyone understands that there is uncertainty and that you may live till 100 or die before your pension. But just because there is uncertainty doesn’t mean that you can’t put a value on something. Insurance companies do this every day when they sell annuities, hence this actuary is actually answering the question.
Okay Ms. Actuary, you win. Now please explain to OP what happens to that 1.5 million dollars you told her was the value of her pension in 17 years, and OP has a misfortune in health or death. OP and her family relied on that imaginary 1.5 million dollars value during their financial planning. If OP was just talking about herself, I might be taking a different position, but she keeps you the word "we", and that is important in her planning.
OP, you should really seek a financial planner and not rely on anonymous posters, including myself. There are too many factors. Pensions are like social security and should be considered income that is not always transferrable. It is future income to you with a term date. Talk to a financial advisor, preferably one who does not try to sell you their products.
Not OP, but in this scenario,
I don’t see any difference between thinking of a pension as an income stream or part of your net asset value. You’re either including it in your long term financial planning or you’re not.
And this risk is fairly easily rectified by looking at the vesting requirements and the survivor benefits for your pension. I am very aware of the survivor benefits for both my own and my spouse’s pensions (we have different plans), and use a conservative approach in my calculations.