Net Worth and pensions
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i am striking out hard tonight trying to find a networth calculator that addresses pensions and how to value them into your net worth. can anyone assist?
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When I was at Credit Suisse I had all these tools on my desktop.
I remember when my buddy won the (VA) state lottery and chose the lump sum. He asked me if it was a good deal. It turned out it was more than we would have valued the 30 year cash flows from a tier 1 bank. VA probably assumed zero credit risk and zero inflation when they calculated it.
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By the way there are better ways to impress the Italian chicks. Start with buying nicer clothes.
@jon-nyc said in Net Worth and pensions:
By the way there are better ways to impress the Italian chicks. Start with buying nicer clothes.
Ha! I'm afraid if they saw my cash flow in retirement, that I would need to hire a doorman at my villa to screen all the aspiring representatives of the fairer sex. I already have a small queue forming on my FB messenger from the American variety
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@NobodySock said in Net Worth and pensions:
how to determine pension value in net worth
ChatGPT said:
To determine the pension value in your net worth, you need to estimate the present value of your future pension payments, since net worth is a snapshot of your financial position today. Here's how you can do that:- Know the Type of Pension
Defined Contribution (e.g., 401(k), RRSP): The account balance is already part of your net worth.
Defined Benefit Pension: You receive a fixed monthly income in retirement. You need to calculate its present value.
- Estimate Annual Pension Income
Determine the annual amount you'll receive. For example:
$30,000 per year starting at age 65.
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Choose a Discount Rate
This reflects the time value of money—commonly 3% to 6% depending on inflation, interest rates, and risk.
For conservative estimates, use a lower rate (e.g., 3–4%). -
Estimate Duration
Use life expectancy to determine how long you'll receive the pension.
For example: 65 to 85 = 20 years. -
Calculate Present Value (PV)
Use the formula for the present value of an annuity:
Where:
𝑃
P = annual pension𝑟
r = discount rate𝑛
n = number of yearsPV=P×(1−(1+r (-n) /r
The formula did not translate perfectly here. that is (1 +r to the negative n)
- Know the Type of Pension
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I'm worth half of a Steve Austin!
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You could have entered your own values and let ChatGPT do the calculation for you, eg:
“I am 55 years old and have a pension of XX per month. Using standard actuarial tables and a conservative discount rate, what would you estimate the present value of my pension to be?”
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You could have entered your own values and let ChatGPT do the calculation for you, eg:
“I am 55 years old and have a pension of XX per month. Using standard actuarial tables and a conservative discount rate, what would you estimate the present value of my pension to be?”
@jon-nyc said in Net Worth and pensions:
You could have entered your own values and let ChatGPT do the calculation for you, eg:
“I am 55 years old and have a pension of XX per month. Using standard actuarial tables and a conservative discount rate, what would you estimate the present value of my pension to be?”
I could tell the truth and admit to doing just that but then people here might think less of my mathamatical abilities and that bothers me.
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@NobodySock Here are a couple that I "fool around with"
https://cfiresim.com/#google_vignette
https://www.firecalc.com/index.php
They both seemed pretty good to me and were fun to play with. I haven't looked at them recently so dont know what (if any) updates or changes have been made.
They both run many simulations based on past stock market returns. I think they call it a "Monte Carlo"
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@NobodySock Here are a couple that I "fool around with"
https://cfiresim.com/#google_vignette
https://www.firecalc.com/index.php
They both seemed pretty good to me and were fun to play with. I haven't looked at them recently so dont know what (if any) updates or changes have been made.
They both run many simulations based on past stock market returns. I think they call it a "Monte Carlo"
@taiwan_girl said in Net Worth and pensions:
@NobodySock Here are a couple that I "fool around with"
https://cfiresim.com/#google_vignette
https://www.firecalc.com/index.php
They both seemed pretty good to me and were fun to play with. I haven't looked at them recently so dont know what (if any) updates or changes have been made.
They both run many simulations based on past stock market returns. I think they call it a "Monte Carlo"
Thats where the variable “discount rate” comes into play. Considering market gains, losses, and good old dependable inflation. I plugged in 4 percent and then there is the crap shoot of picking the number of years one has left to live. With monthly pensions and SS, that magical number makes all the difference in placing value to the as yet untold true pot of gold
