Expert: Allen - 2/10/2005

Question
Hi, I currently work for the NYC government. Under my pension plan, after I retire, I will get 2% of the average of my highest salary of 3 years for each year of service. So, if I work 25 years & the average salary of my highest 3 years was 60,000, I would get 30,000 per year. For the first 10 years I contribute about 6%. After 10 years, I contribute about 3%. What would you say is the value of this benefit in dollar terms?
Thanks for any help you can give.

Answer
If the annuity is paid as long as you live, you can estimate its value by multiplying the annual benefit by 12. So a pension of $30,000 per year is worth approximately $360,000.
If the pension is paid as long as either you or your wife live, you would multiply by 15 to get its approximate value.