Pension Calculator

This calculator uses the defined benefit (DB) formula found in most public sector and traditional pension plans to estimate your retirement benefit.

• Years of Service: the total number of years you work for the employer. Most plans have vesting requirements of 5-10 years before you are entitled to benefits.
• Final Average Salary: many plans use the average of your final 3 or 5 years of earnings, not just your last year. Check your plan documents for the exact definition.
• Benefit Multiplier: the percentage of salary you earn per year of service. Common rates are 1.5% (private sector), 2.0% (most government plans), and up to 2.5-3% for public safety workers (police, fire). A 2% multiplier for 30 years gives 60% of final salary.
• Pension Start Age: taking your pension before the plan's normal retirement age usually triggers an early retirement reduction factor. Check with your plan administrator for the exact reduction percentage.
• Life Expectancy: used to estimate the total lifetime benefit. The IRS average life expectancy for a 62-year-old is about 85 years.

The standard defined benefit formula is:

Annual Benefit = Years of Service × Final Average Salary × Benefit Multiplier %

Example: 25 years of service, $75,000 final salary, 2.0% multiplier:

25 × $75,000 × 0.02 = $37,500/year = $3,125/month

Over 23 years (retiring at 62, to age 85), the total lifetime benefit is $37,500 × 23 = $862,500. This does not account for cost-of-living adjustments (COLAs), which many plans provide annually (often 1-3%).

Early retirement reduction: if your plan's normal retirement age is 65 and you retire at 62, a typical reduction of 5-6% per year early applies, reducing the benefit by 15-18%. Always check your plan's specific early retirement factors before deciding when to leave work.