How to Estimate Your Pension

A joint pension plan removes more money from your own pension.

A pension in retirement can make you quite financially comfortable, and it's usually one of the perks of working for state or federal government. However, you still need to figure your future earnings with your pension based on certain life factors you may not usually think about. If you want your spouse to have your pension after you die, you also have to consider her own potential life possibilities.

Instructions

Figuring Age and Death

1. Write down the age you currently are. While this seems obvious, it helps give you a starting point to determine figures for when you retire.

2. Estimate the age you'll be when you retire and start receiving your monthly pension.

3. Figure your life expectancy based on your medical history. Your single pension benefits would stop at death.

Figuring Insurance, COLA and Rate of Return

1. Look at what your insurance costs will be taken out of your pension per year. The cost of your insurance depends on your age and general health.

2. Subtract the insurance amount from the total pension you expect to receive at retirement.

3. Estimate the percentage of a Cost-of-Living-Adjustment if your pension plan allows for one.

4. Figure your annual compounded rate of return your pension will have until you retire, depending on what kind of investment you have for your pension. Bankrate notes that an average rate of return for the S&P between 1999 and 2009 was -0.6 percent. For the S&P 500 between 1970 and 2009, the rate of return was 10.1 percent.

Calculating Joint Pension

1. Write what your spouse's age currently is.

2. Calculate the age expectancy of your spouse. This determines when she would no longer need your pension benefits after you die.

3. Use the same steps in Sections One and Two to determine the total amount of pension you'll have using a joint pension plan. According to Bankrate, a joint pension plan can generally take about $400 a month extra out of your pension, leaving you less in retirement.

Tips & Warnings

• Figuring pensions can be complicated by unknowns like whether your estimated amount will keep up with inflation.

References

• Bankrate.com: Pension Calculator
• Delaware State Education Association: Calculate Your Pension Benefit
• The Military Guide: Military Retirement and Financial Independence