Pension Calculator
A defined benefit (DB) pension pays a guaranteed monthly income in retirement, calculated from your salary, years of service, and an accrual rate set by your employer. Unlike 401(k) plans, the investment risk is borne by the employer, not the employee.
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Tip: Check if your pension offers a survivor benefit. Choosing a single-life annuity gives higher monthly payments but leaves nothing for a spouse if you die first.
- 1Annual pension = Final salary × Years of service × Accrual rate
- 2Example: $80,000 salary × 25 years × 1.5% = $30,000/year
- 3Monthly pension = Annual pension / 12
- 4Replacement rate = Annual pension / Pre-retirement salary
- 5Most advisors recommend replacing 70–80% of pre-retirement income
$80,000 salary, 30 years, 2% accrual=$48,000/year ($4,000/month)100% replacement if salary unchanged
$60,000 salary, 20 years, 1.5% accrual=$18,000/year ($1,500/month)30% replacement rate — supplement needed
| Sector | Typical Accrual Rate | Notes |
|---|---|---|
| US Federal (FERS) | 1.0–1.1% | Higher for early retirement |
| Military | 2.5% | 20-year cliff vesting |
| State/local government | 1.5–2.5% | Varies widely by state |
| Private sector DB | 1.0–1.5% | Increasingly rare |
| UK final salary | 1/80th–1/60th | Per year of service |
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Fun Fact
Only about 15% of private-sector US workers now have a defined benefit pension, down from 38% in 1980. Government workers still largely have DB pensions — about 84% are covered.
References
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