Enter Retirement Plan Details
Formula Used
Years to retirement: Retirement age − Current age
Final salary: Current salary × (1 + Salary growth)Years to retirement
Defined benefit pension: Final average salary × Accrual rate × Total service years × Survivor factor
Defined benefit lifetime payout: Sum of annual pension payments adjusted by COLA over payout years
Defined benefit present value: Future pension payments discounted by the selected discount rate
Defined contribution yearly contribution: Employee contribution + Employer match + Extra annual contribution
Defined contribution growth: Prior balance plus contributions, grown by investment return minus fees
DC annuity income: Balance × r ÷ [1 − (1 + r)−n]
Replacement ratio: Annual retirement income ÷ Final salary × 100
How to Use This Calculator
Enter your age, salary, retirement age, and expected retirement duration. Then complete the defined benefit section with service years, accrual rate, final average salary period, and pension adjustment values.
Next, complete the defined contribution section with your current balance, contribution rate, employer match, return estimate, fees, and withdrawal assumptions. Press the calculate button. The results appear above the form and below the header section.
Use the chart to compare income and present value. Download the CSV for spreadsheet review. Download the PDF for sharing or saving the projection.
Example Data Table
| Scenario | Current Age | Salary | DB Accrual | DC Contribution | Match | Return |
|---|---|---|---|---|---|---|
| Conservative | 40 | $65,000 | 1.30% | 6% | 50% up to 4% | 5% |
| Balanced | 35 | $75,000 | 1.60% | 8% | 50% up to 6% | 7% |
| Aggressive | 30 | $90,000 | 1.80% | 12% | 100% up to 6% | 8.5% |
Understanding Retirement Plan Choices
A defined benefit plan promises a retirement income. The formula is usually tied to salary, service, and an accrual rate. The employer carries most investment and longevity risk. This structure can feel stable because the payment target is known before retirement.
A defined contribution plan works differently. Money goes into an account. The final value depends on deposits, employer match, fees, and market returns. The worker carries more investment risk. The reward is flexibility, portability, and personal control.
Why The Comparison Matters
Many people compare plans only by today’s contribution rate. That can miss large future differences. A pension may look smaller during working years, but it can create strong lifetime income. A contribution account may grow faster, but withdrawals must last through retirement.
This calculator estimates both paths with common planning inputs. It projects salary growth, final average pay, pension service, contribution rates, employer matching, investment return, fees, inflation, tax, and retirement payout years. It also discounts future income into today’s value.
Reading The Results
The defined benefit result shows annual pension income and lifetime payout. It also estimates present value. This helps compare a stream of payments with an account balance. A higher present value may show stronger lifetime support, but plan rules still matter.
The defined contribution result shows projected account balance. It also estimates a sustainable annual withdrawal. The withdrawal rate is only a planning assumption. Real withdrawals should adjust with markets, inflation, health needs, and taxes.
Useful Planning Notes
Use realistic inputs. Small changes in return, inflation, or salary growth can change the answer. Try several scenarios. Use conservative, expected, and optimistic cases. Compare the chart with the table. Then review the formula section.
This tool is not financial advice. It is a planning model. Actual pensions may include vesting rules, survivor benefits, early retirement reductions, cost of living increases, and legal protections. Actual contribution plans may include fund limits, fees, tax rules, and distribution penalties. Always verify plan documents before making benefit decisions.
For the best view, change one key assumption at a time. This makes results easier to understand. It also shows which plan is more sensitive overall today.
FAQs
1. What is a defined benefit plan?
It is a pension plan that promises income using a formula. The formula often uses salary, years of service, and an accrual rate.
2. What is a defined contribution plan?
It is a retirement account funded by contributions. The final balance depends on deposits, employer match, investment returns, fees, and withdrawals.
3. Which plan is safer?
A defined benefit plan often shifts more risk to the employer. A defined contribution plan usually shifts more market and longevity risk to the worker.
4. Why does the calculator use final average salary?
Many pension formulas use average pay near retirement. This can smooth salary changes and create a more stable pension income estimate.
5. What does replacement ratio mean?
Replacement ratio compares annual retirement income with final salary. It helps estimate how much work income may be replaced after retirement.
6. Why include fees in the contribution plan?
Fees reduce investment growth each year. Even small annual fees can create large differences over a long retirement saving period.
7. Is the PDF result official advice?
No. The PDF is only a saved estimate. Review plan documents and speak with a qualified adviser before making major retirement decisions.
8. Can I test different scenarios?
Yes. Change one input at a time. Try conservative, expected, and optimistic assumptions to understand the range of possible outcomes.