What data and assumptions does it use?

Standard present-value-of-an-annuity formula (public domain); the discount rate is a shown, configurable assumption.

Retirement calculator

Pension: Lump Sum vs Monthly

We convert the monthly pension into a single value today (its present value) so it can be compared apples-to-apples with the lump-sum offer.

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The method

How it works

01 We treat the monthly pension as an annuity paid over the years you expect to collect.

02 We discount those payments to today using an assumed discount rate, giving the pension's present value.

03 We compare that present value with the lump-sum offer.

pensionPV = monthly×12 × [1 − (1+d)^−years] ÷ d, where d is the annual discount rate.

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