Compare a lifetime pension with a lump-sum offer, then stress-test how long the lump sum may last under different withdrawal strategies, returns, taxes, COLA assumptions, and longevity scenarios.
Core calculations run entirely in PHP. The small JavaScript layer is limited to immediate input feedback, conditional fields, focus/scroll behavior, and printing.Faster workflow: the most-used inputs are grouped below. Open Advanced assumptions only when you want to change mortality, COLA, taxes, or investment-rate assumptions.
The calculator now separates two decisions that are often blended together. First, it compares the standardized economic value of the lifetime pension with the lump-sum offer. Second, it models what happens if the lump sum is invested and withdrawals are taken according to the payout strategy you selected. A lump sum can have the higher present value and still be exhausted during a long retirement; a pension can have the lower present value but continue paying for life under the plan terms.
Future pension payments are projected month by month, adjusted for COLA, weighted by modeled survival, and discounted to today. The lump sum is placed on a comparable timing and after-tax basis.
The lump sum is grown at the entered net return and reduced by the chosen payout. This produces a projected depletion age and a remaining balance at the selected comparison age.
Match pension after-tax income asks the lump-sum account to deliver approximately the same spendable cash as the pension after the entered pension-tax assumption. If the lump sum remains in a pre-tax rollover account, withdrawals are grossed up for the entered withdrawal-tax assumption. Match pension gross benefit withdraws the same gross dollar amount as the pension schedule. Fixed custom annual withdrawal uses the amount you enter and keeps it level in nominal dollars.
The depletion age is a deterministic projection, not a probability forecast. It answers: if the account earns the entered constant net return and follows the selected payout rule, when does the modeled balance reach zero? The ±1 percentage-point return sensitivity shows how much that age can shift even before considering real-world market volatility.
Present value rewards money that is available sooner and discounts later payments. A lifetime pension also contains longevity protection: the household cannot outlive the primary lifetime benefit while the plan continues to pay according to its terms. The lump sum offers liquidity and potential legacy value but transfers investment and longevity risk to the household.
The direct-rollover setting keeps the account on a pre-tax basis. The taxable-cash setting reduces the initial lump sum using the entered tax assumption. The already-after-tax setting treats the entered amount as spendable capital. These are simplified planning treatments, not tax-return calculations.
The tool does not model sequence-of-returns risk, progressive tax brackets, RMDs, early-distribution penalties, state-specific rules, plan funding, PBGC limits, plan-specific lump-sum formulas, subsidies, period-certain guarantees, or individualized health. Those issues can materially change a real decision.