Pension Calculator
Estimate your potential pension benefits based on your salary, years of service, and retirement age.
Understanding Pension Benefits
Pension plans are employer-sponsored retirement plans that provide a guaranteed income stream in retirement. Understanding how your pension works is crucial for retirement planning.
Types of Pension Plans
- Defined Benefit Plans: Traditional pensions that guarantee a specific benefit amount based on salary and years of service.
- Defined Contribution Plans: Plans like 401(k)s where the benefit depends on contributions and investment performance.
- Cash Balance Plans: Hybrid plans that combine features of both defined benefit and defined contribution plans.
Common Pension Formulas
- Final Average Salary: Based on your highest average salary over a specified period (usually 3-5 years).
- Career Average: Based on your average salary throughout your career.
- High-3: Based on your highest 3 consecutive years of salary.
Important Considerations
- Vesting: The length of time you must work before you're entitled to receive pension benefits.
- Early Retirement: Taking benefits before normal retirement age may result in reduced benefits.
- Cost of Living Adjustments (COLA): Some pensions include automatic increases to keep pace with inflation.
- Survivor Benefits: Options for providing continuing benefits to a surviving spouse.