How To Calculate Lump Sum Retirement Benefit
Do you want to know how to calculate lump sum retirement benefits? When some people have retired, they may find that they have the option of taking the money that they have set aside for retirement, either through an employee pension plan or in another way, as a lump sum retirement benefit. A lump sum retirement benefit means that, rather than receive a monthly retirement pension, either in the form of a check or through direct deposit into a checking or savings account, you get all of the money at once.
If you think that this would be something you might be interested in and you want to try to calculate your lump sum retirement benefit on your own, here are the steps you need to take:
Talk to your pension administrators in order to obtain the total amount that would be required for you to be paid a monthly check for the remainder of your expected life. This figure will be calculated based on your earnings (either overall or the last three years, or the three years that your earnings were the highest-it will depend on which figures the pension administrators use) as well as other things that your pension administrators will take into consideration.
Once you have obtained the first figure, you will need to check current life expectancy actuary tables. The Social Security Administration has these tables. They are simple to read, you simply find your age and gender, and read across until you find your life expectancy listed in years.
Take the first amount and your life expectancy in years and multiply the two figures together. This will give you the amount you would receive as a lump sum retirement benefit.
Once you have gotten this figure, you will need to take several things into account. For one thing, the figure does not take into consideration the rate of return on that amount, but you are to assume that it will be a reasonable one. Also, you may have to pay taxes on the entire lump sum retirement benefit.