Pension Calculator
Calculate your pension benefits and plan for retirement income
The pension calculator helps you estimate your monthly pension payments based on your years of service, final salary, and pension plan formula. Use this tool to understand your retirement income and plan your financial future effectively.
Employment Information
Salary Information
Pension Formula
Early Retirement Options
Survivor Benefits
Pension Calculation Results
Enter your employment and salary information to calculate pension benefits
Common Pension Scenarios
Teacher Pension
30 years service, 2% multiplier
Government Employee
25 years service, early retirement
Corporate Pension
20 years service, cash balance plan
How Pension Calculations Work
Defined Benefit Formula
Most traditional pensions use this formula:
Example:
- 30 years of service
- 2.0% benefit multiplier
- $80,000 final average salary
- Annual pension: 30 × 2.0% × $80,000 = $48,000
Cash Balance Plans
Cash balance plans work differently:
- Pay Credits: Annual contribution based on salary percentage
- Interest Credits: Account grows with guaranteed interest rate
- Account Balance: Accumulates over career
- Retirement: Convert balance to monthly annuity or lump sum
Benefits are more portable and easier to understand than traditional pensions.
Example Calculation
Teacher Pension Example
Employment Details:
- 30 years of service
- Final average salary: $75,000
- Benefit multiplier: 2.0% per year
- Retirement age: 60
Early Retirement:
- Normal retirement age: 65
- Early retirement reduction: 6% per year
Calculation Result
Full Pension: 30 × 2.0% × $75,000 = $45,000/year
Early Retirement Reduction: 5 years × 6% = 30%
Reduced Pension: $45,000 × (1 - 30%) = $31,500/year
Monthly Payment: $31,500 ÷ 12 = $2,625/month
Replacement Ratio: 42% of final salary
Frequently Asked Questions
What's the difference between a pension and 401(k)?
A pension (defined benefit plan) provides guaranteed monthly payments for life based on your salary and years of service. A 401(k) (defined contribution plan) is an account you contribute to, and your retirement income depends on how much you save and investment returns.
Can I take my pension as a lump sum?
Some pension plans offer lump sum options, but this varies by plan. Consider factors like your health, other retirement income, investment skills, and survivor benefit needs before choosing between monthly payments and a lump sum.
What happens to my pension if I change jobs?
If you're vested (typically after 5 years), you'll receive a pension benefit based on your years of service and salary when you left. The benefit may be smaller than if you stayed until retirement, and you typically can't take it with you to a new employer.
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