Pension Calculator
Estimate your defined-benefit pension, its lifetime value, and how it compares to a lump sum.
Pension Calculator
Plan Formula
Options & Assumptions
Check your plan documents for the exact multiplier (commonly 1.5%–2.5%), salary averaging period, and early-retirement reductions.
| Age | Annual Pension | Cumulative PV |
|---|---|---|
| 62 | $51,000 | $51,000 |
| 67 | $56,308 | $284,958 |
| 72 | $62,169 | $487,349 |
| 77 | $68,639 | $662,433 |
| 82 | $75,783 | $813,894 |
| 87 | $83,671 | $944,919 |
| 89 | $87,051 | $992,238 |
Based on your results — what to do next:
Is the pension enough?
Your $4,250/mo pension replaces 60% of salary — see how much savings must cover the rest.
Layer on Social Security
Add Social Security to $51,000/yr of pension to see your total retirement income.
Self-fund the same income?
Matching $51,000/yr at a 4% withdrawal rate takes a $1,275,000 portfolio.
A pension calculator estimates the monthly income from a defined-benefit pension using your final average salary, years of service, and the plan multiplier. This version adds cost-of-living adjustments, a survivor-benefit reduction, the present value of the payments, and the portfolio you would need to self-fund the same income.
How the Pension Math Works
① Annual pension
P = Final Avg Salary × Years × Multiplier × (1 − Survivor Cut)
The standard defined-benefit formula
② COLA growth
Pk = P × (1 + COLA)k
Benefit in year k of retirement
③ Present value
PV = Σ Pk ÷ (1 + d)k
d = discount rate; compare with a lump-sum offer
| Variable | Meaning | Typical Value |
|---|---|---|
| Salary | Final average salary | Often highest 3–5 years |
| Years | Credited service | Years worked in the plan |
| Multiplier | Percent per year of service | 1.5%–2.5% |
| COLA | Annual cost-of-living increase | 0–3% |
Worked Example — Salary $85,000, 30 years, 2.0% multiplier, retire at 62
- Annual pension: $85,000 × 30 × 2.0% = $51,000
- Monthly: $4,250, about 60% of final salary
- Matching $51,000/yr at a 4% withdrawal rate takes a $1.275M portfolio
💡 Pro-Tip
A pension is an inflation-fighting annuity — price it like one.To compare a pension with a lump-sum buyout, divide the annual benefit by 0.04 to see the portfolio you would need. If the lump sum is far below that number, take the monthly check. Also weigh the survivor option carefully: a 10% cut for a spouse's lifetime benefit is often cheaper than life insurance.
Pension Calculator FAQ
How is a pension calculated?
Most defined-benefit pensions multiply your final average salary by your years of service and a plan percentage, commonly 1.5% to 2.5% per year.
What does a 2% multiplier mean?
You earn 2% of your final average salary for each year of service. Thirty years at 2% gives a pension of 60% of salary.
Should I take a pension lump sum or monthly payments?
Compare the lump sum with the portfolio needed to produce the same income, about 25 times the annual benefit at a 4% withdrawal rate. A monthly pension also protects against outliving your savings.
What is a COLA on a pension?
A cost-of-living adjustment raises your pension each year, often tied to inflation, so your purchasing power holds up.
Next Step: Related Calculators
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Social Security Calculator
Estimate SS retirement benefit at ages 62–70, with spousal benefits and COLA projections.
Safe Withdrawal Rate Calculator
Test the 4% rule: max sustainable withdrawal, portfolio longevity, and year-by-year balance.