Pension Payout Option Calculator

[nwsteve]

Spent enough time at Mega Corp to have a small pension.
I have payout options for different retirement age and am trying to easily figure out tradeoff of different ages vs mortality targets.  Calculation is further complicated by pension is NOT cola so can see some serious erosion.
Any one come across any online calculators to help determine breakeven age Net of inflation??
Actual monthly payouts are 60-$945; 62-1115; 65-1451.
My npv skills are a bit rusty and I think I am making it too hard?
Any help appreciated
Thanks
nwsteve

 

[MasterBlaster]

You need to assume an interest rate and a life expectancy for the lump sump.

use an interest rate like the 30-year T-bond rate ~4.82 % (or whatever your plan uses).

Here's a link to a calculator that will figure your lump sum given an interest rate and the (life expectancy) term.

http://www.hughchou.org/calc/missing.cgi

Fill in all of the fields except "loan amount" and hit enter. The calculated loan amount is your net present lump sum equivalent of the stream of payments at your given interest rate.

 

[nwsteve]

MB
Thanks for the link. I have done the part of the npv process. If you want to allow for inflation to you just discount the interest rate by the effective inlation rate?
If I am only trying to choose which payment series is the most attractive, does inflation even matter since there is only a 5 year spread (15% +simple) between the soonest and latest>
nwsteve

 

[MasterBlaster]

I'm not sure that I understood everything in your last post. 

However, You've got the inflation index concept down. Some people use the CPI for inflation.

If however, your pension is tied to certain bond and inflation indices then you'll need to use what your pension payout uses.