I am currently seeking disability compensation thru a lawyer. I am unable to work due to medical problems. I am 60 years old and have a pension that is worth 500.00 per month when I reach 65. Problem is that I have no income. If I draw on the pension now at 60 it is only worth 340.00 a month. Can anyone tell me what the total pension is worth to date from these numbers? I am 19 years vested from I.A.M.@ A.W. Union . Thanks for any help.
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I am sorry for your troubles, but the bottom line is that more info is needed to calculate the value of your pension and it will not be much.
You can play with different numbers here. You'll need your life expectancy and a prevailing interest rate. The life expectancy will vary based upon your health and nature of your disability. The payment amount will of course be $340.
It is going to be worth somewhere between $10,000 and $30,000. Keep in mind that places that buy these kinds of assets typically buy them at a discount, so at minimum, expect 20% less than the value.
Pete B.
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This really depends on your life expectancy and the expected interest rate. Best way to find out for certain is to ask someone who is buying annuities. After all, something is only worth what someone else is willing to pay for it. A lot goes into these calculations and I am by no means an actuary, but here is a very cursory and rough estimate.
Based on the $340 payments taken at age 60:
30 years @ 8%/yr = $46,350
25 years @ 8%/yr = $44,050
20 years @ 8%/yr = $40,650
Based on $500 payments taken at age 65:
25 years @ 8%/yr = $64,750
20 years @ 8%/yr = $59,750
15 years @ 8%/yr = $52,300
Chris
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Just a thought, but the best way to find out what your pension is worth today if you sold it is to take it to market. Google "Sell my Pension" and poke around at a couple of sites. If you have the time, shop a couple of offers. Whatever is the best offer is (by definition) the current market value of your pension.
As to whether or not you should draw now or not, the following are the cross-over dates for when delaying would be more beneficial based on what your rate of return from investments would be.
0% : 15.6 yrs (if you live more than 15.6 yrs you make more money delaying)
3% : 13.6 yrs
5% : 12.7 yrs
7% : 11.9 yrs
10% : 11 yrs
15% : 10 yrs
20% : 9.25 yrs
100% : 6.16 yrs
Talk to a CFP before you do anything, but be cautious of him selling you anything.
JWally
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