PRESENT VALUE PENSION CALCULATOR
This net present value pension calculator calculates the present value of defined benefit pension plans for division of assets in divorce. This pension appraisal calculator is also useful for people who need to know today’s cash value of their pension in order to make a decision about a lump sum buyout offer from a pension provider, or simply to know their net worth. This calculator can also give you a sense of whether an annuity is good value because it includes mortality data in its calculations (which 99.9% of the present value calculators on the web fail to do). You can then see if the upfront cost of a lifetime annuity stream of payments is commensurate with the actuarial present value of that stream of payments.
This present value (PV) calculator uses an actuarial formula, taking into account both interest rates and mortality rates, to do thousands of calculations. It does not use the “life expectancy” method, which some accountants and financial planners use, because the life expectancy method is inherently inaccurate. You can see a sample present value pension report by clicking here.
This site charges $50 for a single, actuarial present value calculation, $100 for 3 calculations, or $150 for 5 calculations. It charges $75 for a survivor benefit present value calculation. The next best price on the web for an instant, actuarial present value calculation is $175, and actuaries and accountants charge as much as $300 for an actuarial calculation.
You have the option to calculate your present value using any of three actuarial methods: the GATT method, the IRC segment rate method, or the PBGC (4022) method. This is the only present value calculator on the web that allows you to choose among these three methods or run calculations with all three. See a discussion of GATT, IRC, and PBGC interest rates and calculation methods here.
The present value pension calculator is particularly useful for divorcing couples who need a present value appraisal of a pension for division of marital assets. The calculator not only determines the present value of a pension, it also calculates the “marital portion” of the pension using a coverture ratio. In other words, it determines what percent of the present value of the pension was earned during the years of marriage. In many states, this marital portion of the pension is considered marital property, so this part of the total pension present value is shared equally between spouses in many cases. You can learn more about division of retirement accounts in divorce here.
This site also contains two specialized present value calculators, for participants in the Massachusetts State Employee Retirement System (MA SERS) and for participants in the Massachusetts Teachers Retirement System (MTRS). These calculators give the expected monthly pension benefits you can expect, based on your inputs, and, in one step, can generate the actuarial present value of your future stream of pension payments.
This website offers an actuarial survivor benefit present value calculator. If a person is the survivor beneficiary of a pension, that survivor benefit has a present value that can be calculated and used to offset the value of other assets when dividing marital property in divorce.
This site also contains a FREE pension present value calculator-estimator. The free calculator uses the “life-expectancy” method with the interest discounting rate of your choice for giving a ballpark estimate of a pension’s present value.
Finally, this site includes a FREE inflation and COLA (cost-of-living-adjustment) pension calculator which shows you each year of pension annual benefit until age 100 in TODAY’S dollars. It combines sophisticated calculations tailored to your pension’s COLA (cost-of-living-adjustment) with calculations of an inflation rate that you specify. Results for each year until age 100 can be downloaded to a .pdf chart with the click of a button.
I am a Professor of Communication at the University of Massachusetts-Amherst. I received my BA from Brown University and my PhD, in Linguistic Anthropology, from the University of California Los Angeles.
USE THE PRESENT VALUE PENSION CALCULATOR
To use this present value calculator, you must first get one piece of information from your particular pension plan. You must determine what your projected monthly benefit would be if you a) stopped working now, and b) began drawing your pension benefits at a normal, future retirement age for your job or occupation. For example, if you have 15 years of pension plan participation, you must find out what your monthly pension benefit would be if you retired with 15 years of service at age 62, 66, or some other projected retirement age. The retirement age that you choose to determine your future monthly benefit amount is also the retirement age that you will enter in the present value calculator below. It does not matter how old you are right now, and it does not matter if you plan to continue to work at your job for more years. The monthly benefit required for a present value calculation is the benefit that a person who retired at a normal retirement age (that you specify) would get if they had the number of years of service that you currently have .
Your pension plan administrator can provide you with this projected monthly benefit, and many pension plans have online calculators or formulas that allow you to calculate this projected monthly benefit yourself. I have compiled links to pension-specific information for each of the 100 largest pension plans in the United States and pension administrator telephone numbers for an additional 5000 US pension funds. You will enter the predicted monthly benefit they give you into the calculator under “C.6”, below.
Your pension administrator or pension information webpage can also give you information about COLA’s (“cost of living adjustments”) for your pension, if it has any.
This calculator does not work with Internet Explorer–please use a different browser.
Please report any bugs to me and please pass along suggestions on how to make it more comprehensive or user-friendly: [email protected]
|Age||Year||Basic annual pension payment before any cost of living adjust (COLA), if any||Cost of living adjustment (COLA), if any|
A) To pay with a coupon code:i) Enter your coupon code
ii) Click the blue "APPLY" button
iii) Click the large green button "GIVE ME THE PRESENT VALUE".
B) If you do not have a coupon code, i) purchase the number of calculations you desire through PayPal, and then ii) click the large green button "GIVE ME THE PRESENT VALUE":
|Age||Year during which Age starts||Partial Year||Gross Annual Benefit||Dollar value of annual COLA in Gross Annual Benefit||Interest discount rate||Probability of Surviving each year||Present Value of Annual Benefit|