Pension Calculator
Adjust the inputs below. Results update as you type.
How it works
Annual pension = years of service × accrual rate × final (or average) salary. Example: 30 years × 2% × $80,000 = $48,000/year. COLA adjustments, survivor benefits, and early retirement reductions vary by plan. Social Security may be reduced if you also receive a government pension (WEP/GPO provisions). Request your pension plan's Summary Plan Description for exact formulas.
Input guidance
- Use realistic rates from lender or provider quotes instead of headline averages.
- Model conservative, baseline, and optimistic scenarios before deciding.
- Include recurring real-world costs (fees, taxes, insurance, maintenance) where relevant.
The formula
A defined-benefit pension typically pays annual income = years of service × accrual rate × final average salary. The accrual rate is set by the plan (often around 1.5–2% per year).
Worked example
30 years of service at a 2% accrual rate on a $70,000 final average salary yields 30 × 0.02 × $70,000 = $42,000 per year for life.
More examples to test
- Conservative case: use a higher interest rate and lower growth assumptions to stress-test affordability.
- Optimistic case: use a lower rate with stable income assumptions to compare upside potential.
How to interpret results
Treat this as a planning model, not a final approval tool. Compare at least two scenarios and focus on total-cost and cash-flow trade-offs.
When this can be inaccurate
Results can diverge due to fees, changing rates, tax rules, lender policies, and behavior changes that simplified models cannot fully capture.
Change history
- July 2026: Quality-reviewed for publication with formula checks and explanatory copy updates.
Site-wide corrections also appear on the corrections log.
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Frequently asked questions
What is an accrual rate?+
The percentage of salary you earn as pension for each year worked. A 2% rate means each year of service adds 2% of your final salary to the annual benefit.
Lump sum or monthly pension?+
A monthly pension provides guaranteed lifetime income; a lump sum gives control and inheritance potential but shifts investment and longevity risk to you.
Is a pension inflation-protected?+
Some pensions include cost-of-living adjustments; many do not, in which case fixed payments lose buying power over a long retirement.
How should I use this result?+
Treat it as a planning estimate. Compare at least two realistic scenarios, then confirm with statements, quotes, or a qualified professional before acting.
How often should I refresh assumptions?+
Refresh whenever rates, income, costs, or policy limits change materially, and before making irreversible commitments.