Pension Calculator Estimate defined benefit payouts, compare lump-sum vs. annuity, and integrate Social Security — with 2...

Pension Calculator

Estimate defined benefit payouts, compare lump-sum vs. annuity, and integrate Social Security — with 2025 actuarial rules.

Defined Benefit

Lump-Sum vs. Annuity

COLA Adjustment

Integrated Income

Final Avg Salary ($)

Years of Service

Multiplier (%)

Plan Type Teacher (2.0%) FERS Federal (1.1%) State Employee (1.5–2.0%) Corporate (1.0–1.5%)

Retirement Age

Annual Benefit ($)

Retirement Age

Discount Rate (%)

Life Expectancy 85 years 90 years 95 years

Survivor Option 100% Joint 75% Joint 50% Joint Single Life

Base Benefit ($)

Years in Retirement

COLA Type CPI-Linked (Max 3%) Fixed 2% None

Pension ($/yr)

Social Security ($/yr)

401(k) Withdrawal ($/yr)

$0

Annual Pension

$0

Monthly Pension

$0

Lump-Sum Equivalent

$0

Total Retirement Income

Pension Formula Breakdown

How Defined Benefit Pensions Work

Pension Formula**:

$$ \text{Annual Benefit} = \text{Final Avg Salary} \times \text{Years of Service} \times \text{Multiplier} $$

Examples**:

• CA Teacher**: $80,000 × 30 × 2.0% = **$48,000/yr**
• FERS Federal**: $95,000 × 25 × 1.1% = **$26,125/yr** + SS
• Corporate**: $70,000 × 20 × 1.25% = **$17,500/yr**

Final Avg Salary Methods**:

• High-3**: Highest 3 consecutive years
• High-5**: Highest 5 consecutive years
• Career Avg**: Lifetime average (less common)

✅ Pro Tip**: Maximize final years — overtime, promotions, delayed retirement can boost pension significantly.

Pension Red Flags

⚠️ Avoid these dangerous assumptions:

• Non-COLA plans** — $45K today = $22K in 25 yrs (3% inflation)
• Early retirement penalties** — 5% per year before NRA (e.g., 62 vs. 67)
• Lump-sum undervaluation** — PBGC rates (4.2%) favor healthy retirees choosing annuity
• Forfeiture rules** — Leave before vesting (3–5 yrs) = $0 pension

✅ Pro Tips**:

• Estimate **net COLA** = (CPI − plan cap) → many “CPI-linked” plans cap at 2–3%
• Use SSA Quick Calculator for integrated planning
• Compare annuity PV to **low-cost SPIA** (Single Premium Immediate Annuity) quotes

2025 Pension Benchmarks

Plan	Multiplier	$75K × 30 Yrs	COLA
CA STRS (Teacher)	2.0%	$45,000/yr	2% fixed
NYSLRS Tier 6	1.66%	$37,350/yr	CPI (max 2%)
FERS (Federal)	1.1%	$24,750/yr	None (SS + TSP)
IBM Corporate	1.0%	$22,500/yr	None

📉 Lump-Sum Multipliers (Age 65, 4.2% rate)**:

• Single Life: **11.7x annual benefit** ($45K → $526K)
• 75% Joint: **10.3x** ($45K → $464K)
• 100% Joint: **8.8x** ($45K → $396K)

How to Use This Calculator

➡️ Defined Benefit

“$75K final salary, 30 yrs, 2.0% — what’s my pension?” ($45,000/yr)

➡️ Lump-Sum vs. Annuity

“$45K/yr at 65 — is $500K lump sum fair?” (Yes: 4.2% rate = $526K fair value)

➡️ COLA Adjustment

See how 2% fixed vs. CPI (3% avg) impacts 25-year payout stream.

➡️ Integrated Income

Combine $45K pension + $22K SS + $30K 401(k) = **$97K/yr retirement income**

Note: Uses 2025 PBGC segment rates, SSA life tables, and standard plan formulas. Assumes no early retirement reduction unless modeled manually.