A walkthrough, end to end.
- 1
Enter years of service, final average salary, and the plan's benefit factor (multiplier per year of service).
- 2
The calculator returns annual and monthly pension income.
- 3
Compare against your retirement spending need to see if the pension alone covers it.
Defined-benefit pension formula
Most defined-benefit pensions: annual benefit = years of service × benefit factor × final average salary. Benefit factors range from 1% (modest plans) to 2.5% (rich public plans). Some plans cap the maximum at e.g. 80% of salary.
What you can do with this.
Public sector pension
Teacher with 30 years × 2% factor × $75K final salary = $45K/year pension. Most US public pensions use factors of 1.5%-2.5%. Vesting typically requires 5-10 years of service.
Private sector pension (rare)
Most private companies have shifted to 401(k)s. Remaining defined-benefit plans typically use 1-1.5% factor. Mature workers at long-tenured companies may still have meaningful pension benefits.
Military retirement
US military retirement (legacy plan): 2.5% × years × final basic pay. 20 years = 50% of final pay for life. Newer Blended Retirement System: 2% factor + 401(k)-like Thrift Savings Plan.
Cost-of-living adjustments (COLA)
Some pensions include annual COLAs (1-3% typical). Others are flat for life — purchasing power erodes 30-50% over a typical retirement. The calculator gives nominal starting income; factor inflation separately.
Joint and survivor options
Pension can be set up to continue (full or 50%) for surviving spouse. Joint-and-survivor reduces monthly amount by ~10-20%. Worth considering when one spouse has significantly higher pension than the other.
Pension lump-sum buyout
Some plans offer a lump sum instead of monthly income. Compare lump sum to PV of pension stream at your discount rate. For risk-tolerant investors, lump sum sometimes wins; for stability seekers, lifetime income usually does.
Pension + Social Security + 401(k)
The retirement income trifecta. Pension covers some baseline; Social Security adds more; 401(k) covers gap and discretionary. Use the calculator for the pension piece; combine with retirement calculator for full picture.
Pension calculator 2026 — what's current
PBGC-insured corporate pensions are limited to ~$85K/year guarantee in 2026. Many state public pensions are underfunded — check funded ratios for your specific plan to assess risk of future benefit reductions.
Frequently asked.
Public pensions: 1.5-2.5% per year of service. Private: 1-1.5%. Military: 2-2.5%. Compare to your specific plan documents — factors vary materially.
Most pensions allow early retirement at age 55-60 with reduced benefits, full benefits at 60-65. Federal pensions and military have specific age/service combinations. Check your plan's tier.
Generally yes — taxed as ordinary income at federal level. State tax varies (some states exempt all or some pension income). Roth-converted pension assets, if applicable, are tax-free.
No. Calculations run entirely in your browser.