At my former employer, I earned a vested “defined benefit” pension starting when I turn 65 years old. Because I left the company, the pension benefit is frozen. I know what I will receive (assuming the company and the pension benefit guarantee fund don’t go under) a fixed monthly payment of a certain amount.
To determine the value of the stream of payments, I considering building a discounted cash flow model; however, any DCF analysis would be flawed without access to the appropriate mortality impact on the future cash flows.
Luckily, I know some people in the annuity business. From them, I have a fairly accurate estimate of the cost of purchasing an annuity to replace the pension.
Question: Should the present value of the pension be considered when calculating Net Worth? Opinions are welcome and desired.