Pension Calculator

Compare pension payout options using your plan quotes

This pension payout calculator compares three defined-benefit scenarios. It does not derive a pension entitlement from salary or years of service. Ask your plan administrator for quotes for the same start date, payment form and beneficiary before comparing them. For a savings account with contributions, use the retirement savings calculator instead.

Lump sum vs monthly pension

The chart compares the lump sum with the present value of pension income through each modeled final age. The crossover is the first whole age-year whose pension present value meets or exceeds the lump sum. It is not a prediction of how long you will live, a withdrawal account balance or a recommendation to elect either payment form.

Single life vs joint-and-survivor

Enter separate monthly quotes and a survivor continuation percentage. The single-life stream ends after your modeled death age-year. The joint stream pays the full quote while you are alive, then the selected percentage while your spouse survives. If your spouse dies first, your joint payment stays unchanged; a pop-up provision is not modeled. The comparison also shows a hypothetical investment of the payment difference and capital to replace survivor payments, not a life-insurance quote.

Retire earlier vs work longer

Each monthly quote starts at its own retirement age, with COLA starting from that date. Both streams are discounted to the earlier retirement age. Salary earned while working longer, contributions, employment benefits, taxes and time away from work are excluded. There is no universal pension increase for delaying retirement: enter actual plan quotes.

Calculation method and timing

For annual return r, COLA c, starting monthly quote M and offset t from that option's start, annualized income is 12 × M × (1+c)^t. Lump-sum and retirement-age comparisons discount that income at the midpoint of each year and report the completed age after those payments. For example, the first year's payments from age 65 to 66 are valued at age 65.5. Survivor comparisons instead include the entered death age-year and discount annualized income at each age-year's start; the invested payment difference is accumulated to its end. These are explicit annual approximations, not a valuation of individual monthly check dates.

For example, an $800,000 lump sum versus $5,000 per month, with 5% annual return and 3.5% COLA starting at 65, first crosses at completed age 81. With zero return and zero COLA, a $120,000 lump sum and $1,000 monthly pension starting at 65 are equal after 10 payment years, at completed age 75. These examples use the stated timing convention, not a mortality table.

Plan rules and limitations

All values are nominal US dollars before taxes, fees and inflation. The return is a constant comparison assumption, not a promised investment yield. No survival probabilities, insurer pricing, pension funding guarantees, eligibility rules, tax withholding or rollover determination are calculated. The 3.5% example COLA is not a standard pension benefit. PBGC states that its pension payments have no statutory COLA.

PBGC's pension benefits overview describes payment forms, survivor percentages and PBGC-specific rules. Its annuity or lump sum guide discusses factors beyond arithmetic. Those rules do not establish the options available under your plan. Sources explain the context; they do not endorse this calculator.

Continue your retirement estimate

For a separate account-growth scenario, use the IRA calculator; its traditional, Roth and taxable-account comparisons answer a different question from the pension quotes above. For an own-account required-withdrawal estimate, use the RMD calculator and check its account and table assumptions. Neither tool determines whether a pension lump sum is eligible for a rollover.

Frequently asked questions

Does every plan offer a lump sum or COLA?

No option is assumed to be available to you. Use the plan's written offer; enter zero COLA when there is no increase.

Does the crossover identify the best choice?

No. It compares modeled cash flows only. Spouse protection, longevity, taxes, investment risk and plan terms can change a household's decision.

Why can crossover ages differ between calculators?

Payment timing, partial years and age rounding matter. This tool reports the first completed whole payment year whose present value meets the comparison option, rather than rounding a partial-year crossing down. Survivor death ages use the separate inclusive convention stated above.

Where can I estimate other retirement income?

Use the 401(k) calculator for contribution scenarios and the Social Security calculator for that separate benefit estimate.