What is Pension Value Estimator?
Estimates your future annual pension income based on years of service, salary average, and accrual rate. Pensions (Defined Benefit Plans) differ from 401ks (Defined Contribution) as they guarantee a lifetime payout.
How it Works
Standard Formula: (Years of Service × Accrual Rate) × Final Average Salary. For example, 20 years × 2% rate × $80,000 avg salary = $32,000/year pension.
Step-by-Step Guide
- Years Served – Input total years worked at retirement.
- Salary Base – Average of your highest earning years (often 'High 3').
- Accrual Rate – Percentage multiplier (e.g., 1.5% or 2%).
- Calculate – View annual benefit.
Example
Input: 20 Years, 2%, $80k Salary
Result: $32,000/year
FAQ
What is an accrual rate?
The percentage of your salary you earn for each year of service (usually 1% to 2.5%).
What is vesting?
The time you must work before you are entitled to the pension (often 5 years).
Is it inflation-adjusted?
Check if your plan has a COLA (Cost of Living Adjustment); many private plans do not.
Lump sum vs Annuity?
Calculators often show the annuity (monthly pay). A lump sum is the present value of that stream.
Does this include Social Security?
No, this calculates your employer pension only.
Conclusion
A pension is a powerful retention tool. Knowing its value helps you decide if leaving a job early is worth losing potential unvested benefits or future multipliers.