THE NUMORIX GUIDE
How to use the Pension Calculator
Last reviewed September 14, 2026
What this calculator does
Each pension comparison values a stream of monthly payments by summing payment x (1 + COLA/12)^month divided by (1 + investmentReturn/12)^month.
Formula and method
Each pension comparison values a stream of monthly payments by summing payment x (1 + COLA/12)^month divided by (1 + investmentReturn/12)^month. Lump-sum mode compares that present value with the entered lump sum. Single-versus-joint mode uses separate life expectancies, and work-longer mode compares each option's monthly benefit over a horizon ending at age 85.
Variables and inputs
Choose lump sum versus monthly, single versus joint, or work longer. Inputs include lump sum, monthly pension, retirement age, investment return, COLA, life expectancies, spouse age, single and joint monthly benefits, and the two option ages and benefits. Ages are years, payments are monthly dollars, and rates are annual percentages.
Worked example
For a $2,000 monthly pension from age 65 through age 85 with 0% investment return and 0% COLA, the route uses 20 x 12 = 240 payments. Present value is 2,000 x 240 = $480,000. Against a $500,000 lump sum, the simplified comparison selects the lump sum because $500,000 is greater than $480,000.
How to interpret the result
The larger present value is called the better choice by the selected comparison, but value is not the only pension decision. Longevity, survivor protection, inflation, investment risk, liquidity, plan guarantees, and the household's need for predictable income also matter.
Common mistakes to avoid
Use monthly benefits rather than annual benefits in the payment fields. Keep the return and COLA as annual percentages. Do not assume the spouse age changes the calculation in every mode; the current engine's joint comparison uses spouse life expectancy and retirement age.
Assumptions and limitations
The horizon for lump-sum and work-longer calculations is hardcoded to age 85, and the engine uses simple annual-rate-to-monthly-rate division. It does not model taxes, survivor elections, plan solvency, health, partial COLA rules, or the value of other household assets.