How Much is Your Pension Worth? Calculate its value to your net worth.

An easy way to calculate how much a pension is worth. This calculation gives a dollar figure equivalent of the amount that would be included on your net worth statement.

Usually, it is difficult to put a value on the future income stream from a pension or annuity, but this video shows a simple way to make the calculation.

The guaranteed income multiplier chart is available using this link:

The information was originally published in a research paper in the November 2018 issue of the Journal of Financial Planning. The link to the original article is here:

[anthonydooley]

The best part of this video is that you didn't spend 12 minutes explaining this. Thank you.

[clagueb]

I'm 71 in my 20th year of retirement. My income is 125% of my pre-retirement income. Never thought I would be this wealthy. My pension has a 3% cola. Paid cash for a new home in 2019. Zero debt. I'm going to live until the day I die.

[CliveBirse]

Retirement becomes truly fulfilling when you possess two essential elements: ample financial resources and a meaningful purpose in life. Make prudent investment choices to secure good returns and ensure a comfortable retirement.

[greenwil]

Simply fabulous. I got froggy and factored in my Social Security, as well as my pension. Happy with the numbers.

[chipott]

What this does is illustrate just how valuable pensions can actually be. Also the reason many companies replaced them with 401Ks.
A great video for those starting their career and weighing the differences between, for instance and private sector job or one with the federal government.

[Meadowlark]

Thank you so much for this information! We retired 10 years ago and never learned the 'face amount' of the pension, only the monthly amount. This is very helpful to us.

[skibum]

Great video, simple, short and to the point. I always figured my pension was worth around a million dollars as it would pay out like a million dollar 401k using the rule of 4 and your equation matched that almost exactly.

[LuboMirtchev]

I made a simple calc a couple of yers ago and came up with similar number. Inteesting how intuition a lot of times is spot on.

[stuartjames]

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[joedessenberger]

Appreciate the information. I had tried this before with a calculation of years based on life expectancy, which is very close to this. I have one pension that receives a COLA based on inflation and a second pension that had the COLA set at the CPI on the second full year of retirement. That COLA is a set amount I receive every year going forward, so in high inflation years I fall behind, but at least it is something. Thank you!

[donaldlee]

The chart seems to value pensions somewhat optimistically. In my case it if I use the 4% rule (I think 5% is more realistic but I'll go with a conservative #) my pension is worth $1.57M. Using the chart I get $2.35M. I feel the former # is closer to reality.

[thomasryan]

My pension is worth more than I ever thought. I'm buying everyone breakfast tomorrow. Thank you~

[MaxPower-]

It would be interesting to know what the authors of the study that produced the tables back in 2018 assumed the long term rate of inflation would be. I think people nowadays might assume a higher rate of inflation going forward. As such, one might place a higher premium towards pensions whose payout adjusts to inflation.

[lecruset]

Well, according to the chart you provided my pension is worth $1, 284, 000. I'm staring at the number and can't wrap my head around it. I'm 45, eligible to retire in 15 years. According to my HR department, my projected yearly pension amount is $66K. I also have a 3% COLA increase each year. Not too shabby.

[howellwong]

I don't give a Hoover Dam. My pension covered all of my expenses plus 10K for the last 23 years. What more can I ask, 10 more years? I am 90 years old.

[CA]

I’ve said for yrs IMO all pensioners are millionaires regardless of what they get. When you factor that most get to retire much earlier than non pensioners and their incomes aren’t affected by the stock market or a bad economy it would take millions in a privately funded portfolio to equal what they get.

[tupac]

Great video Andrew, very useful information. I found your information from the Tec show. Looking forward to learning more from your content. Subscribed.

[hunkydude]

It depends where you have worked period.

[usddcm]

Wouldn't you need to know the interest rate? These charts are from 2018. Interest rates are higher now and the value of the pension would be less. It works like bonds with the payout based on life expectancy rather than a fixed term.

[larriveeman]

Easy way is divide pension amount by withdrawal rate, example 60k /.04 = 1.5mil