Value of annuity question

[bigdaddybus]

I have an annuity that will begin paying $125,000 a yr for life in Oct of 2036.

How do I figure out its current value?

[Nutria]

You need a "present value annuity" calculator.

[corn18]

I have an annuity that will begin paying $125,000 a yr for life in Oct of 2036.

How do I figure out its current value?

Depends on some factors, but around $1M. You can go to https://www.immediateannuities.com and start with the data that applies to you and put in $1M for the amount to invest and just adjust it until it spits out $10,417 / month for life. This only calculates non COLA value. If your annuity has a COLA, it is worth a LOT more.

I used it to estimate the dollar value of my military pension. It's around $1.6M.

[bigdaddybus]

Thanks for the replies!

[feh]

I have an annuity that will begin paying $125,000 a yr for life in Oct of 2036.

How do I figure out its current value?

Why do you want to? It's not an asset - if you die, nothing is collected, correct?

I would instead treat it as a future income stream. It's not part of your net worth.

[Nutria]

Why do you want to? It's not an asset - if you die, nothing is collected, correct?

Depends on the kind of annuity.

[corn18]

I wanted to know the value of my pension many years ago since I was so dreadfully behind on saving for retirement. Just interesting to know what it would cost to buy a $3500 / mo, COLA with survivorship SPIA. Made me feel a little better, but the real aha moment came when I started to figure out what I needed to retire. The pension is an income stream that reduces the amount I need to save. Now I don't care what my pension is worth as an annuity, I care how much income it provides and the COLA, which is awesome for inflation protection.

[bigdaddybus]

Why do you want to? It's not an asset - if you die, nothing is collected, correct?

I would instead treat it as a future income stream. It's not part of your net worth.

I was just looking to figure out the current value of my pension. If I pass, it is transitioned to my spouse (75%) in addition to her pension.

[bigdaddybus]

I wanted to know the value of my pension many years ago since I was so dreadfully behind on saving for retirement. Just interesting to know what it would cost to buy a $3500 / mo, COLA with survivorship SPIA. Made me feel a little better, but the real aha moment came when I started to figure out what I needed to retire. The pension is an income stream that reduces the amount I need to save. Now I don't care what my pension is worth as an annuity, I care how much income it provides and the COLA, which is awesome for inflation protection.

I wish my pension had COLA! We will have multiple income streams in retirement so it wont be a huge hit, but cola would be soo nice as well.

[LivingAlmostLarge]

bigdaddy that's a large pension. Wow.

[scfr]

I was just looking to figure out the current value of my pension. If I pass, it is transitioned to my spouse (75%) in addition to her pension.

Have you thought about calculating the present day value based on the "worst case scenario" (you passing and it transitioning to your spouse at 75%) in order to have a more conservative estimate of it's current value?

[bigdaddybus]

Have you thought about calculating the present day value based on the "worst case scenario" (you passing and it transitioning to your spouse at 75%) in order to have a more conservative estimate of it's current value?

I have term life insurance until age 53, as coverage for a worst case senerio.

[bigdaddybus]

bigdaddy that's a large pension. Wow.

To be honest, thats the combined value of my spouses pension and mine. Basically we get 50% of our highest 5 yr average salary +bonuses if we stay enough years.

I was just looking to find out a value for the pensions, to add to our roth and 401K numbers to get a total idea of how we are doing.

I appriciate all the responses, as I was expencting to hear the typical. "You cant count on a pension" just like all the social security doomsday posters out there. Thankfully the pension is heald by an employee association spereate from the company and 100% funded, so I have quite a bit of faith in it being around.

[corn18]

I run several scenarios in Flexible Retirement Planner:

1. Base only (No pension, no SS) - make sure I have enough saved for a base amount that is reasonable. Not poor, not rich, just right (for me, that's $76k / year expenses)

2. Base + pension - here comes the nicer vacations and higher spending (add $45k / year spending). This is a military pension, so I don't think it is at high risk of going away.

3. Base + pension + SS @ 70 - This is great for my heirs. SS + Pension covers all my expenses including plenty of leisure money, so anything left when I start SS @ 70 will likely go to them.

You should run similar scenarios to see what each looks like.

Tom

[Nutria]

Thankfully the pension is heald by an employee association spereate from the company and 100% funded, so I have quite a bit of faith in it being around.

Just make sure the plan administrators don't do Stupid Stuff in their quest for higher returns!!