Estimate what a defined benefit pension will pay you. Most plans use the same formula: years of service × benefit multiplier × final average salary, reduced if you retire before the plan's normal retirement age.
Last updated:
You
$
%
Plan formula
% per year
Often 1.5%–2.5% for public plans, 1%–1.5% in companies.
Age for an unreduced pension.
% per year
Per year before normal retirement age.
% of salary
Leave 0 for no cap.
%
e.g. 8–15% for a joint & survivor option.
Payout
% a year
%
Enter your values to see the result.
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How to use the Pension Calculator
Enter your age, planned retirement age and years of service.
Enter your salary and expected raises so the final average salary can be projected.
Fill in your plan's multiplier, averaging period, normal retirement age and early reduction from your plan booklet.
Optionally add a cap, survivor option and COLA.
Press Calculate pension and compare retirement ages in the table.
The pension formula
Annual pension = years of service × multiplier × final average salary × (1 − early reduction) × (1 − survivor reduction)
Early reduction = reduction per year × years before normal retirement age (never below zero)
Final average salary = average of your pay over the averaging period just before you retire
Lump-sum value = sum of each year's payment ÷ (1 + discount rate)years from retirement
Example: 25 years of service, a 2% multiplier and an $80,000 final average salary give 50% × $80,000 = $40,000 a year. Retiring 3 years early with a 5% per year reduction cuts it by 15% to $34,000, or $2,833 a month.
Common multipliers and what they mean
Multiplier
20 years
25 years
30 years
35 years
1.0%
20%
25%
30%
35%
1.5%
30%
37.5%
45%
52.5%
2.0%
40%
50%
60%
70%
2.5%
50%
62.5%
75%
87.5%
Percentages are of final average salary, before any cap or early reduction.
Tips for estimating your pension
Use the figures in your plan's summary plan description or annual benefit statement; this calculator applies them consistently.
Each extra year of work can raise the pension three ways: one more year of service, a higher final average salary and a smaller early reduction. The table shows the effect.
Without a COLA, inflation slowly reduces what a fixed pension buys: at 2.5% a year, $1,000 buys about $610 worth after 20 years.
Pensions are usually taxable as income. The WEP and GPO rules that used to cut Social Security for many government pensioners were repealed by the Social Security Fairness Act in January 2025.
Frequently asked questions
How is a pension calculated?
Most defined benefit plans multiply three numbers: years of service, a benefit multiplier (for example 2%) and your final average salary. With 30 years, a 2% multiplier and a $70,000 final average salary, the pension is 30 × 2% × $70,000 = $42,000 a year, or $3,500 a month.
What is final average salary?
The average of your pay over a set period, usually the last or highest 3 or 5 years of service. Because pay tends to rise over a career, this is normally higher than your career-average pay. Some plans exclude overtime or bonuses.
How much is a pension reduced for early retirement?
It depends on the plan. Many reduce the benefit by 3% to 7% for each year you retire before the normal retirement age, so retiring 5 years early at 6% per year cuts the pension by 30%. Some public plans waive the reduction once age plus service reaches a set number.
What is a good pension multiplier?
Public employee plans commonly use 1.5% to 2.5% per year of service, and safety workers such as police and firefighters often get 2.5% to 3%. Private company plans are usually lower, around 1% to 1.5%.
Should I take a lump sum or monthly pension?
A monthly pension gives guaranteed income for life, while a lump sum gives control and something to leave to heirs. Compare the lump sum offered with the present value shown here and think about your health, other income and investing comfort.
What does a survivor option cost?
Choosing a joint and survivor pension so your spouse keeps receiving payments after your death reduces your own monthly benefit, often by around 5% to 15% depending on both ages and the percentage that continues.
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