Hello Folks,

Weird question but was hoping I could get some input of estimating/calculating the present day value of my companies defined benefit pension. I'm doing this because I'd like to include this in my total yearly compensation in case I decide to look for another job and am negotiating compensation. There are alot of smart/analytical/helpful people here so I figured it would be a good place to get some feedback

I'm currently 39 y/o and have been with my company for ~ 12 years. The Defined Benefit Pension Plan (DBPP) formula for my company is

Years of Service X .015 X (average of last 5 years of salary). I am able to start receiving payments when I turn 65 (in 2045). My current salary is ~ 155K

So this is how I calculated the "present day" yearly value of the DBPP. Please me know if you see any flaws in my thought process....

I "pretended" that I am turning 65 in 2020 and have 12 years of service and will be retiring and then calculated the yearly benefit

12 X .015 X 155K = $27,900

I know I need to factor in inflation and see how much "buying power" $27,900 will have in 25 years. I'm assuming a 3% yearly inflation rate. I used an online inflation calculator: (https://www.buyupside.com/calculator...ationjan08.htm)

Which tells me the $27,900 I would have gotten if I was 65 and retiring this year will be worth about $13,325 of buying power in today's dollars in 25 years. This means my "present day value" of my DBPP is ~$13,325 a year.

Does this make sense? Is my logic flawed?

Thanks in advance!

## Comment