Pension Calculator
Weigh the two classic pension choices: take the lump sum and invest it yourself, or receive a monthly pension with cost-of-living adjustments. Compares both to your life expectancy and shows the monthly income the lump sum could support.
TheCalculators — Pension Calculator
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Monthly Pension Wins
$531,397
At age 85: pension stream worth $2,654,035 vs lump sum grown to $2,122,638
- Lump Sum Grown at Retirement
- $2,122,638.16
- Pension Stream Value
- $2,654,035.37
- Cumulative Pension Received
- $1,696,781
- Monthly Income the Lump Supports
- $5,230.69/mo
- Pension Exceeds Lump (nominal) In
- 12 years
- COLA Growth
- 3.5%/yr
Milestones through retirement
Assumes pension stops at life expectancy, the lump sum is fully invested at a constant return, and COLA compounds annually. Survivor benefits and taxes are not modeled.
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Formula
Lump FV = L(1+r)^n; Pension FV = Σ Monthly×12×(1+COLA)^(y−1)×(1+r)^(n−y)
Pro tips
- • A higher assumed investment return favors the lump sum; a high COLA favors the pension.
- • Pensions are guaranteed income that reduces sequence-of-returns risk, which pure math does not capture.
FAQ
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