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The New Coffee Room

  1. TNCR
  2. General Discussion
  3. Net Worth and pensions

Net Worth and pensions

Scheduled Pinned Locked Moved General Discussion
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  • 8 Offline
    8 Offline
    89th
    wrote on 5 May 2025, 12:30 last edited by
    #8

    Ugh I just got an MBA flashback of Net Present Value and now I feel sick.

    1 Reply Last reply
    • J Online
      J Online
      jon-nyc
      wrote on 5 May 2025, 12:34 last edited by jon-nyc 5 May 2025, 12:35
      #9

      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.

      Thank you for your attention to this matter.

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      • 8 Offline
        8 Offline
        89th
        wrote on 5 May 2025, 12:41 last edited by
        #10

        Ah so that's how Copper was able to retire.

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        • J jon-nyc
          5 May 2025, 11:43

          By the way there are better ways to impress the Italian chicks. Start with buying nicer clothes. ๐Ÿ˜

          N Offline
          N Offline
          NobodySock
          wrote on 5 May 2025, 18:14 last edited by
          #11

          @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. ๐Ÿ˜

          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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          • N Offline
            N Offline
            NobodySock
            wrote on 5 May 2025, 18:27 last edited by
            #12
            This post is deleted!
            N 1 Reply Last reply 5 May 2025, 18:30
            • N NobodySock
              5 May 2025, 18:27

              This post is deleted!

              N Offline
              N Offline
              NobodySock
              wrote on 5 May 2025, 18:30 last edited by NobodySock 5 May 2025, 18:33
              #13

              @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:

              1. 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.

              1. Estimate Annual Pension Income
                Determine the annual amount you'll receive. For example:

              $30,000 per year starting at age 65.

              1. Choose a Discount Rate
                This reflects the time value of moneyโ€”commonly 3% to 6% depending on inflation, interest rates, and risk.
                For conservative estimates, use a lower rate (e.g., 3โ€“4%).

              2. Estimate Duration
                Use life expectancy to determine how long you'll receive the pension.
                For example: 65 to 85 = 20 years.

              3. Calculate Present Value (PV)
                Use the formula for the present value of an annuity:

              Where:

              ๐‘ƒ
              P = annual pension

              ๐‘Ÿ
              r = discount rate

              ๐‘›
              n = number of years

              PV=Pร—(1โˆ’(1+r (-n) /r

              The formula did not translate perfectly here. that is (1 +r to the negative n)

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              • N Offline
                N Offline
                NobodySock
                wrote on 5 May 2025, 18:30 last edited by
                #14

                I'm worth half of a Steve Austin!

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                • N Offline
                  N Offline
                  NobodySock
                  wrote on 5 May 2025, 18:31 last edited by
                  #15

                  Thanks for the ChatGPT Jon. Wonderful use of AI

                  1 Reply Last reply
                  ๐Ÿ‘
                  • J Online
                    J Online
                    jon-nyc
                    wrote on 5 May 2025, 19:18 last edited by
                    #16

                    You could have entered your own values and let ChatGPT do the calculation for you, eg:

                    โ€œI 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?โ€

                    Thank you for your attention to this matter.

                    N 1 Reply Last reply 5 May 2025, 21:45
                    • J jon-nyc
                      5 May 2025, 19:18

                      You could have entered your own values and let ChatGPT do the calculation for you, eg:

                      โ€œI 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?โ€

                      N Offline
                      N Offline
                      NobodySock
                      wrote on 5 May 2025, 21:45 last edited by
                      #17

                      @jon-nyc said in Net Worth and pensions:

                      You could have entered your own values and let ChatGPT do the calculation for you, eg:

                      โ€œI 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?โ€

                      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.

                      1 Reply Last reply
                      • J Online
                        J Online
                        jon-nyc
                        wrote on 5 May 2025, 22:24 last edited by
                        #18

                        Ha

                        Thank you for your attention to this matter.

                        1 Reply Last reply
                        • T Offline
                          T Offline
                          taiwan_girl
                          wrote on 6 May 2025, 00:50 last edited by taiwan_girl 5 Jun 2025, 00:51
                          #19

                          @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"

                          N 1 Reply Last reply 6 May 2025, 03:52
                          • T taiwan_girl
                            6 May 2025, 00:50

                            @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"

                            N Offline
                            N Offline
                            NobodySock
                            wrote on 6 May 2025, 03:52 last edited by
                            #20

                            @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 โ€œdiscount rateโ€ 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

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