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URL:  http://boards.fool.com/basically-there-is-no-way-to-know-without-running-22889856.aspx

Subject:  Re: Is the pension worth it? Date:  8/15/2005  9:42 AM
Author:  2old4bs Number:  47229 of 75523

Basically there is no way to know without running the numbers. Is there any calculator you know of that I can use for this? Or what sort of formula it would require to determine how much she would need to make in a new job vs what her pension would pay, etc.

I only know a 'quick and dirty' way of doing this. For example, if her pension were to pay her $10,000 per year, assuming a safe withdrawal rate of 4%, she would need $250,000 in hard cash savings to match that annual payment. (10,000/.04=savings required to match) $25,000/year equates to $625,000. (These are in 'todays' dollars)

So, in addition to her estimated annual pension payment, she also has to take into account how much money she would need to make elsewhere each year for five years in order to net an after-tax savings amount of the hard dollars required to match her pension.

Another thing to be taken into account is whether or not her pension payments will be adjusted upward over time, or are they fixed?

Inflation also has an effect on the numbers, but as I stated above, this is merely a 'quick and dirty' way to estimate.

2old

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