Pension Options Calculator
Pension Options Calculator
Should you choose a higher monthly pension payment or a smaller payment that continues to support your spouse after you pass away? It's an important retirement decision that can have lasting financial consequences.
Use our free Pension Options Calculator to compare single-life and joint-and-survivor pension benefits. See how much monthly income you may give up to protect your spouse, estimate the value of survivor benefits, and explore whether life insurance could provide an alternative.
Which pension option is best for your retirement plan?
The right choice depends on more than your monthly pension payment. Your spouse's income needs, life expectancy, other retirement savings, taxes, and Social Security benefits can all influence the decision.
With WealthTrace Retirement Planning Software, you can compare different pension options as part of your complete retirement plan. See how each choice affects your future cash flow, investment balances, and long-term retirement outlook.
Start a free trial to compare your options and make a more informed retirement decision.
Which pension option is right for you?
Compare the higher monthly income of a single-life pension with the survivor protection of a joint-and-survivor pension. Explore the estimated cost of replacing the survivor benefit with life insurance.
Your pension details
Adjust the amounts below to see how the pension options compare.
Monthly income given up for survivor protection
Difference between the two pension payments at retirement.
Survivor replacement coverage over time
Estimated lump sum needed if you die at different ages after retirement, assuming the stated return and survivor lifespan.
Estimates are hypothetical and do not determine which option is best. Insurance pricing is illustrative and not a quote.
Make the pension decision part of your retirement plan
Use WealthTrace to see how pension income, Social Security, investment withdrawals, taxes, and your spouse's future income needs fit together.
Start a free trial →View detailed pension comparison and assumptions
Coverage needed by age at death
| Your age | Spouse's age | Survivor benefit / mo. | Replacement amount | Est. insurance / mo. |
|---|
Definitions
Current age
Your current age.
Retirement age
Age you are going to retire and begin receiving your pension benefits.
Your life expectancy
Your estimated age of death. This is the age at which Single Annuitant Pension benefits would end.
Spouse age
The current age of your spouse.
Spouse's life expectancy
The estimated age of your spouse's death. This is the age they will no longer require benefits.
Single pension at retirement
The monthly pension payment you will receive if you choose a single annuitant pension.
Joint pension at retirement
The monthly pension payment you will receive if you choose a joint survivorship pension.
Survivor Benefit Percentage
The percentage of your joint-and-survivor pension that your spouse will continue to receive after your death.
Many pension plans offer different survivor benefit options, commonly 50%, 75%, or 100%. Choosing a higher survivor percentage generally reduces the monthly pension payment you receive while you're alive, but provides greater financial protection for your spouse.
For example, if your joint pension payment is $2,000 per month:
50% survivor benefit: Your spouse receives $1,000 per month.
75% survivor benefit: Your spouse receives $1,500 per month.
100% survivor benefit: Your spouse receives $2,000 per month.
These amounts are before any applicable cost-of-living adjustments.
Enter the monthly pension amount quoted by your pension plan for the selected survivor option. The calculator does not automatically adjust your pension payment when you change the survivor percentage.
Check your pension plan documents to confirm the survivor benefit amount and whether cost-of-living adjustments continue after your death.
Insurance cost per thousand
Your estimated cost of life insurance per thousand dollars of coverage per year. Please note that this is only an estimate, your actual costs can vary considerably depending on your health, sex and age. This calculator assumes that your life insurance has no cash value.
Indexed for COLA
If your pension is indexed for a Cost of Living Adjustment, check this box.
COLA annual adjustment
This is the rate your cost of living increases each year. This is also used if your pension is indexed for a Cost of Living Adjustment. This is what you expect for the average long-term inflation rate. A common measure of inflation in the US is the Consumer Price Index (CPI). From 1925 through 2011, the CPI has a long-term average of 3.0% annually. Over the last 31 years, the highest CPI recorded was 13.5% in 1980.
Rate of return on investments
This is the annually compounded rate of return you expect from your investments. The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor's 500 (S&P 500) for the 10 years ending Dec. 31st, 2011 had an annual compounded rate of return of 2.92%, including reinvestment of dividends. From January 1970 through the end of 2011, the average annual compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 10.01% (source: www.standardandpoors.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a financial institution may pay as little as 0.25% or less but carry significantly lower risk of loss of principal balances.
It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that funds and/or investment companies may charge. For the purposes of this calculator, taxation is not factored into the results. If you pay taxes on the interest, dividends or capital gains from these investments, you may wish to enter your after-tax rate of return.
Cost of insurance per thousand
This is the yearly cost of insurance per thousand dollars of coverage. For example, if you need $500,000 of life insurance coverage and have a cost of $10 per thousand, your annual premium would be $5,000.
Choose the right pension option
Compare pension payout choices and see how each could affect your retirement plan.
