Pension Calculator
Your pension from the plan formula, and lump sum or monthly
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Your yearly pension
$40,000
Per month
$3,333
Of final salary
50.0%
Paid to 90
$1,200,000
$80,000 × 25 years × 2.00% is $40,000 a year, 50.0% of your final average salary. At 60 the IRS Single Life Table gives about 27.1 more years, to around age 87.
Pension value at 5.0%
$645,643
More than the $550,000 lump sum
Break-even return
6.62%
The lump sum pays the same to 90 only above this return
Lump sum lasts to
Age 81
Paying the same amounts at 5.0%
Pension and lump sum over time
| Age | Yearly pension | Paid so far | Lump sum left |
|---|---|---|---|
| 60 | $40,000 | $40,000 | $535,500 |
| 64 | $40,000 | $200,000 | $469,878 |
| 69 | $40,000 | $400,000 | $367,621 |
| 74 | $40,000 | $600,000 | $237,111 |
| 79 | $40,000 | $800,000 | $70,544 |
| 84 | $40,000 | $1,000,000 | $0 |
| 89 | $40,000 | $1,200,000 | $0 |
Payments at the start of each year. The lump sum column pays the same amounts out of the lump sum and grows the rest at the return you set. Amounts are before tax.
By the Coast FIRE Calculator editorial team · Methodology · Official sources: 26 CFR 1.401(a)(9)-9(b): Single Life Table; IRS Publication 590-B, Appendix B, Table I (the same Single Life Table) · Sources checked September 26, 2026 · Corrections: hello@coastfirecalculator.io
How your pension is worked out
A defined benefit pension pays a set amount for life, worked out from a formula instead of an account balance. The standard formula multiplies three numbers: your final average salary, your years of service and the plan's multiplier. With $80,000, 25 years and a 2% multiplier, the pension is $40,000 a year.
Each plan defines these numbers its own way, for example which years of salary are averaged and which pay counts, and some plans reduce the pension if you retire before their normal retirement age. Your plan's handbook or benefit statement gives the exact rules.
Federal employees under FERS have their own formula; the FERS retirement calculator uses it, and the TSP calculator covers the Thrift Savings Plan.
Lump sum or monthly pension?
Some plans let you take the pension as a single lump sum. To compare, the calculator works out what the payments are worth today at the return you could earn on the lump sum. If that value is higher than the lump sum, the monthly pension is the better deal at that return.
The break-even return turns this around: it is the yearly return the lump sum would need to pay the same amounts until the age you compare to. In the example on this page, $40,000 a year from 60 to 90 is worth $645,643 at 5%, so a $550,000 lump sum needs 6.62% a year to keep up.
The numbers are only part of the choice. A pension keeps paying however long you live, and a cost-of-living increase adds to its value. A lump sum can run out, but what is left can go to your heirs, and you control how it is invested.
Life expectancy at common retirement ages
| Age | More years | To about age |
|---|---|---|
| 55 | 31.6 | 87 |
| 60 | 27.1 | 87 |
| 62 | 25.4 | 87 |
| 65 | 22.9 | 88 |
| 67 | 21.2 | 88 |
| 70 | 18.8 | 89 |
From the IRS Single Life Table (26 CFR 1.401(a)(9)-9(b), Table I in Publication 590-B), the table used for required minimum distributions. Checked September 26, 2026.
Planning around a pension
A pension lowers how much you need to save yourself: the Coast FIRE calculator and the FIRE calculator show your number. If you take a lump sum, the retirement withdrawal calculator shows how long it lasts with your own withdrawals, and money rolled into a traditional IRA has required minimum distributions from 73 or 75 (see the RMD calculator).