Pension Calculator
Estimate a defined-benefit pension payout.
e.g. 2% per year
Results update as you type.
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How it works
A defined-benefit pension pays a guaranteed retirement income based on a formula rather than an account balance, and this calculator estimates that payout. You enter your years of service, the plan's benefit multiplier, and your final average salary, and it returns your annual pension, the monthly amount, and the share of your salary it replaces. The standard formula multiplies these three numbers: more years of service, a higher multiplier, and a higher final salary all increase the benefit. The multiplier, often between about 1 and 2.5 percent per year of service, is set by the plan and is a key driver — a 2 percent multiplier over 30 years replaces 60 percent of final salary. The final average salary is usually the average of your highest few years of pay, such as the last three or five, depending on the plan. Pensions like these are common for government workers, teachers, and some large employers, and they provide reliable lifetime income, often with survivor and cost-of-living options that can adjust the amount. This is a simplified estimate; your actual pension depends on your plan's exact formula, salary averaging rules, early-retirement reductions, and payout options. Enter your years, multiplier, and salary to estimate your pension.
Annual pension = years of service × multiplier × final average salary
A defined-benefit pension multiplies your years of service by a benefit multiplier (a percentage set by the plan) and your final average salary. The result is your annual pension; dividing by twelve gives the monthly benefit, and dividing by salary shows what share of your pay the pension replaces.
Source:Defined-benefit pension formula
We review all our tools from time to time to ensure accuracy.
Worked example
How to use this calculator
- 1
Enter your values
Enter years of service, benefit multiplier and final average salary.
- 2
Adjust the options
Fine-tune any options to match your situation.
- 3
Read your result
Annual pension updates instantly as you type — no button to press.
Frequently asked questions
How is a pension benefit calculated?
A defined-benefit pension typically multiplies your years of service by a benefit multiplier and your final average salary. For example, 30 years at a 2 percent multiplier on an $80,000 final salary yields $48,000 per year. The calculator computes your annual and monthly benefit and the percentage of salary it replaces from these three inputs.
What is the benefit multiplier?
The multiplier is the percentage of your final average salary you earn for each year of service, set by the pension plan. It commonly ranges from about 1 to 2.5 percent. A higher multiplier means a larger pension for the same service and salary, so it is one of the most important features when comparing or valuing a defined-benefit plan.
What is final average salary?
Final average salary is the average of your pay over a set number of your highest or final years, often the last three or five, as defined by the plan. Using an average rather than a single year smooths out fluctuations. Because the pension scales directly with this figure, higher earnings late in your career meaningfully boost the benefit.
How does a pension differ from a 401(k)?
A pension is a defined-benefit plan that promises a set income for life based on a formula, with the employer bearing the investment risk. A 401(k) is a defined-contribution plan where you and sometimes your employer contribute to an account you invest, and your retirement income depends on the balance and returns. Pensions offer certainty; 401(k)s offer control and portability.
Can I get cost-of-living increases on a pension?
Some pensions, especially public-sector ones, include cost-of-living adjustments that raise your benefit over time to keep pace with inflation, while many private pensions pay a fixed amount that loses purchasing power over the years. Whether your plan has a COLA significantly affects the long-term value, so check your plan's rules when estimating retirement income.