What Is Net Worth and Why Include Your Pension
Net worth is the difference between your total assets and total liabilities. A pension is a future income asset that can be included in net worth calculations to reflect long-term financial security.
How to Calculate Pension Value for Net Worth
To estimate pension value, determine the expected annual payout and divide it by a reasonable discount rate, often between 4% and 6%. This produces an approximate present value you can add to your asset column.
Practical Tips and Considerations
Use conservative assumptions for discount rates and life expectancy. Keep records of benefit statements and survivor options. For more detail on pension valuation approaches, refer to guidance from the U.S. Department of Labor at https://www.dol.gov/agencies/ebsa.
