Here's how I would do it: each year, figure out what your pension benefit would be at retirement age, whenever you think you'll take it. Multiply the annual benefit by 25 to get a "portfolio equivalent" - i.e. if you had to replace it using your portfolio, you'd use a 4% SWR. Then, discount that to present dollars using an appropriate discount rate - I'd use 9-10% given that that's the historical nominal (not inflation-adjusted) stock market return.

Make sense?

I don't really understand the discounting part. I know WHY it needs to be done, but I don't understand HOW. Let's pretend my pension at age 65 would be worth 4,000 (probably accurate). The lump sum amount at age 65 is a little mor than a million, I remember that much. What do I do with that number to "discount" it properly?

Assuming you mean $4,000 per month, that's $48,000 per year, which multiplied by 25 gives a portfolio equivalent of $1.2 million. To figure out the present value, you'd use:

X* (1 + d)^n = $1.2 million

where:

d = discount rate

n = number of years to retirement

So, for d = 10% and n = 10, for example, you'd get

X = $1.2 million / (1.10^10)

X = $462,652

Is that clear?

Also, I'd caution you to only use the benefits that you've earned to date. That is, if at age 65 you'd get a $4,000/month pension if you worked until then, but you're currently 55, I'd only use the benefit that you'd receive if you stopped working today, since you in fact haven't actually earned the full pension benefit yet. Plus, that way, you can track the increase in your pension each year due to working longer.