Net Worth calculation: how to value government defined benefit pension

[Spudd]

There's no real point to calculating net worth anyways as far as I can tell, except to look at it and tell yourself you're rich (which I fully admit to enjoying doing).

[marina628]

The bank people want to know every time I update my investment questions ,other than that I am not concerned and most times I guess the answer

[Square Root]

My pension represents about 35% on our net worth and about 40% of our after tax income. 100% to surviving spouse. Why wouldn't I include it? The real question might be why someone calculates net worth. Only reason I can think of to do this in retirement is ego. Oh oh. I should stop doing this.

[marina628]

I am 15 years from collecting a pension so although i know i will get x dollars if I live to collect it , I do not count on it for planning.Of course if i were collecting it now i would consider it as part of the package.

[OhGreatGuru]

The only reason for including DB pension in your net worth estimate is to relieve your anxiety when you read financial articles saying you need to save "X Million Dollars" in order to retire comfortably, because those articles (nearly) always ignore value of pensions.
Otherwise, it's true these pensions have no cash value or estate value, so they should just be a footnote to your net worth calculation.

[MoneyGal]

They do have a (non-tradeable) economic value. The stream of pension income can also function like a form of fixed income in your portfolio, so if you were interested in doing a holistic personal balance sheet and adjusting your asset allocation (for your investable wealth) accordingly, you might want to take the pension and/or the pension income into account. Someone around here wrote a book on that. I think.

[marina628]

MoneyGal that blue book in your photo sits with Doyle Brunson's Super System which he signed for me in 2010 and the Theory of Poker.I have read them all more than once :0).I came to conclusion as long as my ROI on cash games is 120% a day I should be fine .I will then write my own book and open a Poker school with the proceeds

[Daniel A.]

My DB pension is my only income every month, some day I will get use to the idea that I get paid to play.

[sags]

So...........if you have 1,000,000 in cash and you buy an annuity.......is it no longer considered net worth?

For the purposes of divorce or bankruptcy.................pensions certainly have a cash value.

A clearly defined benchmark would be necessary for net worth calculations to have any meaning..........no?

[Square Root]

Agree MG and SAGS. In my case I treat the pension as a FI substitute and put our portfolio into equities. This works pretty well I think given the fact that the portfolio yields close to 4% and the dividends are growing nicely. FI yields are pretty sad at this point.