How much is a pension worth compared to retirement savings.

[Weatherman2020]

I found this article today about how to factor in a pension for retirement planning.

Helping retirement plan participants understand their net worth - Journal of Accountancy

Two easy mistakes seen in retirement planning involve valuation of pensions and improper net-worth comparisons.

www.journalofaccountancy.com

A good rule of thumb is that the retiree would need $18,000 in retirement savings for every $1,200 per year ($100 per month) of earned pension income. In applying this rule, the amount of earned pension income an employee has at any point in time is based on the employer's pension formula, the employee's current earnings, and the time spent on the job to date.

...

As an example, examine how much an earned pension income of $30,000 would add to a person's net worth. A defined benefit plan income of $30,000 annually is $2,500 per month, which is 25 times $100. Therefore, it follows that funding such a pension benefit with a 401(k)-style defined contribution plan would require retirement savings of at least $450,000 (25 × $18,000). Consequently, the defined benefit plan adds $450,000 to net worth.


What do you all think of this formula?

I get pretty close to the same numbers when I just calculate how much a pension will have paid if I live to be 85. So I feel the formula is pretty good.

With Bidenomics almost everyone under 45 will not have enough savings to maintain their lifestyle.

For those that do you use a financial professional in a large firm. They have the tried and proven formulas.

 

[Harpy Eagle]

With Bidenomics almost everyone under 45 will not have enough savings to maintain their lifestyle.

For those that do you use a financial professional in a large firm. They have the tried and proven formulas.

I truly pity people for whom everything and anything is about polotics.

How much your life has to suck.

I am so glad I am not you.

 

[my2¢]

The company I retired from provided a pension and free health insurances (that became secondary to Medicare once I reached 65). Was fortunate to contributed throughout my career to a 401k. Besides the pension and the 401k, a paid off house, having no other loans, and the kids being financially independent is a big load off a retiree's back.