Pension Calculator

Estimate your annual and monthly defined-benefit pension from your final average salary, years of service, and the plan's accrual multiplier. See your income replacement ratio.

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Pension Calculator

Defined-benefit estimate

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Annual Pension
Monthly Pension
Income Replacement
Pension vs Salary

How a Pension Is Calculated

Most defined-benefit pensions use a simple formula: Annual Pension = Final Average Salary × Years of Service × Accrual Multiplier. The multiplier (often 1%–2.5% per year of service) is set by the plan. So 30 years of service at a 2% multiplier on an $80,000 final average salary yields 80,000 × 30 × 0.02 = $48,000 per year, or $4,000 per month — a 60% income replacement ratio.

"Final average salary" is usually the average of your highest 3 or 5 years of pay, depending on the plan. The income replacement ratio (pension ÷ salary) shows how much of your working income the pension replaces; combined with Social Security and personal savings, retirees typically aim to replace 70%–85% of pre-retirement income. This estimate doesn't include cost-of-living adjustments, early-retirement reductions, or survivor options, which vary by plan.

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The Formula

Salary × Years × Multiplier. A 2% multiplier over 30 years replaces 60% of final salary.

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The Multiplier

Typically 1%–2.5% per year of service, set by your plan. Higher multipliers and longer service mean a bigger pension.

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Replacement Ratio

Pension ÷ salary. Combined with Social Security and savings, aim to replace 70%–85% of working income.

FAQ

By multiplying your final average salary by your years of service and the plan's accrual multiplier. For example, $80,000 × 30 years × 2% = $48,000 per year. The exact "final average salary" definition (often highest 3 or 5 years) and the multiplier are set by your specific plan documents.
Multipliers typically range from 1% to 2.5% per year of service. A 2% multiplier is common and generous; many public-sector plans use 2%–2.5%, while private plans (where they still exist) often use 1%–1.5%. A higher multiplier produces a larger pension for the same salary and service.
No. This estimates only the base defined-benefit pension. It excludes Social Security, cost-of-living adjustments (COLA), early-retirement reductions, and survivor-benefit options, all of which depend on your specific plan and situation. Use it as a starting estimate and confirm details with your plan administrator.

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✔ Reviewed by the True Value Calc editorial team🗓 Last updated June 2026📚 Sources: IRS retirement limits, Social Security Administration