How to enter a Pension in the future year value in Lifetime Planner

My pension value is specified as the yearly value that I will receive at age 65. For example purposes, assume the pension will be $10,000 at age 65. I get the same amount every year after that until I pass away. No cost of living increases so COLA = 0%. The Quicken Lifetime Planner is asking to enter in today's dollars. If enter $10,000, the Lifetime planner uses the inflation rate and increases to say $12,670. I need to decrease by inflation and enter $7893. That works and I get the expected $10,000 as income every year in the Lifetime Planner. But there are two problems with this approach.

1) If I change the inflation rate I need to remember to update the value entered for the pension.
2) I will need to update as time moves forward since the amount of increase by inflation changes. Next year the value I need to enter is slight more to still get the $10,000 value at retirement.

Does anyone have a better solution? This seems like a common problem and Quicken should allow entry in future dollars.

Thanks

Answers

  • Scooterlam
    Scooterlam SuperUser, Windows Beta Beta
    While I don't have a pension modeled in my own LTP or an expert in pensions, I did check this out in a test file that also spanned a calendar year (to evaluate #2).  

    In your example, I believe you are correct on both counts 1 and 2. I am not so confident there is a better solution or workaround to what you suggested.  Perhaps another member who has a pension modeled in LTP can chime in.

    Given the defined-benefit $10k at age 65, it would seem that the pension input in LTP should be referenced in future dollars rather than today's dollars. Ref. Image.  For those not of age, this would avoid the messy maintenance you describe.  Additionally, for those whose pension has already started, the benefit input perspective (today v future) would be a "dont care" as you would be reporting your actual benefit for the current year.



    I can see where Quicken tries to keep benefit input perspectives consistent between SS and pensions - both in today's dollars.  But the important difference between the two is that SS benefits are indexed by your inflation rate setting (in real life its wage inflation).  So setting SS in today's dollars works....not so much with pensions it seems.

    Any other perspectives out there?

  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    For what it is worth I have run into this in the past and also wish that Quicken would allow entering the amount in future dollars.  But in fact other than the calculation I believe that the problem you brought up would still surface because of the way this number is being calculated against inflation.

    Right now it seems that they are taking a current number and then just do the math each month to include inflation.  There isn't anything in it that say place this amount into the tables at this date and then calculate inflation from then on.
    Signature:
    (I'm always using the latest Quicken Windows Premier subscription version)
    This is my website: http://www.quicknperlwiz.com/
  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    P.S. In my case it wasn't a future income it was a future expense, but the same issue comes up.
    Signature:
    (I'm always using the latest Quicken Windows Premier subscription version)
    This is my website: http://www.quicknperlwiz.com/