Pension Calculator
Pension Math Is Simpler Than You Think — Once You Know the Formula
Unlike a 401(k), a traditional defined-benefit pension doesn't depend on market returns or how much you personally saved. It runs on a fixed formula tied to your salary history and tenure, which means the payout is almost entirely predictable once you know three numbers: your final average salary, your years of service, and the plan's accrual rate. This calculator applies that formula directly so you can see the monthly and annual benefit a plan is promising.
The Formula
The accrual rate is the percentage of salary earned per year of service — commonly between 1% and 2.5% depending on the plan. Most plans also cap the benefit at 100% of final average salary, which this calculator applies automatically if the raw formula would exceed it.
Where This Calculation Matters
- Comparing job offers — a government or union role with a pension can be worth far more in retirement than a higher salary without one, but only a projected benefit makes that comparison fair.
- Deciding when to retire — because the formula rewards years of service linearly, working a few extra years can meaningfully raise the benefit.
- Coordinating with Social Security — some public-sector pensions interact with Social Security eligibility rules, so knowing the pension amount first helps frame that conversation.
- Retirement income planning — feeding the monthly pension figure into a broader income plan shows how much additional savings withdrawal is actually needed.
Benefit as a Percentage of Final Salary
| Accrual rate | 20 years of service | 30 years of service | 40 years of service |
|---|---|---|---|
| 1.5% | 30% | 45% | 60% |
| 2.0% | 40% | 60% | 80% |
| 2.5% | 50% | 75% | 100% (capped) |
Plans typically cap total benefits at 100% of final average salary; the 2.5% accrual rate at 40 years hits that cap exactly.
How to Use This Calculator
- Enter your final average salary — usually the average of your highest-earning consecutive years under the plan.
- Enter your total years of service under the plan.
- Enter the plan's accrual rate as a percentage (check your plan summary for the exact figure).
- Select Calculate to see your estimated annual and monthly pension benefit, with a note if the 100%-of-salary cap applies.
Related Calculations
Add this benefit to savings-based income with the Retirement Income Calculator, or check Social Security to build a full picture of guaranteed retirement income.