Put a dollar value on pensions?
@JoeTaxpayer's answer outlines how to value it. Some other considerations: As I understand it, some public pensions may be tax-free if you still live in the state that is paying the pension. E.g. when a Massachusetts teacher receives pension, it is exempt from state taxes, but if that person moves to Vermont he will have to pay Vermont income tax on those payments. So if you plan to stay in the state post-retirement, this provides additional value. Pension payments aren't fully guaranteed by the PBGC. And not all pension plans are fully funded. Depending on the political and economic environment when you hit retirement, your retirement plan could suffer. (And if you aren't working, you may not have a union vote any more when the other working members are voting on contract amendments that affect pensions.) I'm not certain of all of the rules, but I hear news reports from time to time that formulas like what you've posted in the original question are changed through negotiation with the union. If you make an employment decision using the formula in year X and then the formula changes in year X+10, your expected pension payment will change. There are two steps. First you take the age at retirement and annual benefit. Say it's $10,000/yr. You can easily look up the present value of a $10k/yr annuity starting at age X. (I used age 62, male, at Immediate Annuity. It calculates to be $147K. You then need to look at your current age and with a finance calculator calculate the annual deposits required to get to $147K by that age.  What I can't tell you is what value to use as a cost of money until retiring. 4%? 6%? That's the larger unknown.
"If you dig deeper and look at the original study, what's being measured is ""retirement-plan participation"": specifically, money in 401(k) plans and IRAs.  This omits every other possible source of retirement money: things such as general savings, non-retirement investments, property ownership, pensions, etc. As an extreme example, I know someone who's retired with property worth a million dollars, another million dollars in stock, a pension providing thousands of dollars a month plus health insurance, and not one penny of what the study would consider ""retirement savings"". Yes, the average American family is under-prepared for retirement.  But it's nowhere near as bad as the article makes it sound." I recommended Currency Trading For Dummies, in my answer to Layman's guide to getting started with Forex (foreign exchange trading)? The nature of the contract size points toward only putting up a fraction of the value.  The Euro FX contract size is 125,000 Euro. If you wish to send the broker US$125K+ to trade this contract, go ahead. Most people trade it with a few thousand dollars. Right, so once again, engineering problem -- Pension funds could be treated differently, and pension fund experts could be consulted as to how to design the taxation system such that pension fund recipients aren't able to cheat the idle tax laws if their expected benefit/share of the fund is larger than certain cutoff values. Fundamentally interest rates reflect the time preference people place on money and the things money can buy.  If I have a high time preference then I prefer money in my hand versus money promised to me at some date in the future.  Thus, I will only loan my money to someone if they offer me an incentive which would be an amount of money to be received in the future that is larger than the amount of money I’m giving the debtor in the present (i.e. the interest rate). Many factors go into my time preference determination.  My demand for cash (i.e. my cash balance), the credit rating of the borrower, the length of the loan, and my expectation of the change in currency value are just a few of the factors that affect what interest rate I will loan money. The first loan I make will have a lower interest rate than the last loan, ceteris paribus.  This is because my supply of cash diminishes with each loan which makes my remaining cash more valuable and a higher interest rate will be needed to entice me to make additional loans.  This is the theory behind why interest rates will rise when QE3 or QEinfinity ever stops.  QE is where the Federal Reserve cartel prints new money to purchase bonds from cartel banks.  If QE slows or ends the supply of money will stop increasing which will make cash more valuable and higher interest rates will be needed to entice creditors to loan money. Note that increasing the stock of money does not necessarily result in lower interest rates.  As stated earlier, the change in value of the currency also affects the interest rate lenders are willing to accept.  If the Federal Reserve cartel deposited $1 million everyday into every US citizen’s bank account it wouldn’t take long before lenders demanded very high interest rates as compensation for the decrease in the value of the currency. Does the Federal Reserve cartel affect interest rates?  Yes, in two ways.  First, as mentioned before, it prints new money that is loaned to the government.  It either purchases the bonds directly or purchases the bonds from cartel banks which give them cash to purchase more government bonds.  This keeps demand high for government bonds which lowers the yield on government bonds (yields move inverse to the price of the bond).  The Federal Reserve cartel also can provide an unlimited amount of funds at the Federal Funds rate to the cartel member banks.  Banks can borrow at this rate and then proceed to make loans at a higher rate and pocket the difference. Remember, however, that the Federal Reserve cartel is not the only market participant.  Other bond holders, such as foreign governments and pension funds, buy and sell US bonds.  At some point they could demand higher rates.  The Federal Reserve cartel, which currently holds close to 17% of US public debt, could attempt to keep rates low by printing new money to buy all existing US bonds to prevent the yield on bonds from going up.  At that point, however, holding US dollars becomes very dangerous as it is apparent the Federal Reserve cartel is just a money printing machine for the US government.  That’s when most people begin to dump dollars en masse. I have had pension programs with two companies.  The first told you what your benefit would be if you retired at age X with Y years of service. Each year of service got you a percentage of your final years salary. There was a different formula for early retirement, and there was an offset for social security. They were responsible for putting enough money away each year to meet their obligations. Just before I left they did add a new feature. You could get the funds in the account in a lump sum when you left. If you left early you got the money in the account. If you left at retirement age you got the money that was needed to produce the benefit you were promised. Which was based on current interest rates. The second company had a plan where they published the funding formula. You knew with every quarterly statement how much was in your account, and what interest it had earned, and what benefit they estimated you would receive if you stayed until retirement age. This fund felt almost like a defined contribution, because the formula was published. If most people took the lump sum that was the only part that mattered. Both pension plans had a different set of formulas based on marriage status and survivor rules. The interest rates are important because they are used to determine how much money is needed to produce the promised monthly benefit. They are also used to determine how much they need to allocate each year to cover their obligations.  If you can't make the math work you need to keep contacting HR. You need to understand how much should be flowing into the account each month. he general advice I get is that the younger you are the more higher risk investments you should include in your portfolio. I will be frank. This is a rule of thumb given out by many lay people and low-level financial advisors, but not by true experts in finance.  It is little more than an old wive's tale and does not come from solid theory nor empirical work.  Finance theory says the following: the riskiness of your portfolio should (inversely) correspond to your risk aversion.  Period. It says nothing about your age.  Some people become more risk-averse as they get older, but not everyone.  In fact, for many people it probably makes sense to increase the riskiness of their portfolio as they age because the uncertainty about both wealth (social security, the value of your house, the value of your human capital) and costs (how many kids you will have, the rate of inflation, where you will live) go down as you age so your overall level of risk falls over time without a corresponding mechanical increase in risk aversion. In fact, if you start from the assumption that people's aversion is to not having enough money at retirement, you get the result that people should invest in relatively safe securities until the probability of not having enough to cover their minimum needs gets small, then they invest in highly risky securities with any money above this threshold. This latter result sounds reasonable in your case.  At this point it appears unlikely that you will be unable to meet your minimum needs--I'm assuming here that you are able to appreciate the warnings about underfunded pensions in other answers and still feel comfortable.  With any money above and beyond what you consider to be prudent preparation for retirement, you should hold a risky (but still fully diversified) portfolio.  Don't reduce the risk of that portion of your portfolio as you age unless you find your personal risk aversion increasing. This is hyperbole that makes assumptions about engineering details that are easily addressed: Use a system analogous to marginal tax rates to solve this problem.  Have 0-tax cutoff values a few times larger than expected pension/retirement fund savings values for individuals. As an actuary (health, not pensions), this is what we do.  We spend years(5+) taking exams and learning about the best and proper ways to predict liabilities, probabilities, and other statistics that we use to forecast cost and return in the future.  I am in health, not pensions, but I would check out [Actuarial Outpost](http://www.actuarialoutpost.com/actuarial_discussion_forum/forumdisplay.php?f=15) and /r/actuary. The subreddit tends to be a younger (see student) crowd but there may be someone who can better answer your question.