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If you're retired or nearing retirement age, you probably have some questions about your retirement pension. When you have a defined-benefit plan, you'll have to make some tough choices when you apply for benefits.

Selecting a pension option that guarantees benefits to a spouse after your death can bring peace of mind but also smaller monthly payments. A pension option that only pays through your lifetime can provide larger monthly benefits, but requires a lump-sum payout to protect the surviving spouse.

Our pension calculator can help you hash out the important details. To learn more about defined-benefit pension plans, take a look at our detailed FAQ below. If you like this calculator, please share it with your friends.


Why does this pension calculator do?

Our pension calculator can help you figure out the best choice for your pension. The calculator comes with a ton of benefits that make it easy to figure out your preferred option.

For example, it lets you see the dollar difference between a single pension and joint pension, as well as the survivor benefit for your spouse based on our life expectancy table and calculations.

It even lets you see what your pension looks like if the Cost of Living Adjustment (COLA) is factored into your pension plan and lets you enter the rate at which your cost of living is expected to increase each year.

With our calculator, retirement doesn't have to be a stress-inducing thought. You can prepare for the retirement you want by figuring out the ---pension plan you need today.

What are the main pension types?

While there are dozens of ways to squirrel away money for retirement, there are only two types of pension plans in the United States: defined contributor pensions and defined benefit pensions.

For clarity, a traditional pension plan is considered a defined benefit plan, while the more common 401k is considered to be a defined contributor plan.

Let's break down the types of defined benefit pensions.

Single Life Pension

Essentially, a single life pension pays out a pension benefit each month for the remainder of the pension holder's life. If the pension holder dies, the payments stop, even if there is money left on the pension.

So, why would you want to get a single life pension?

Well, for one thing, they have the highest monthly payments, since there's only one beneficiary and the payments only need to be made for the remainder of that individual's lifetime.

The downside is that your spouse, children, or other family members will not receive a survivor benefit when you die.

Joint and Last Survivorship Pension

This is where joint and survivorship pensions come in.

Like a single life pension, joint or survivorship pensions make one payment each month. However, unlike single life pensions, there are two beneficiaries, usually the pension holder and their spouse.

As a consequence, because this type of pension plan has to pay longer, the monthly payout is typically lower than a single life pension. You lose a bit of income, but you gain the peace of mind knowing that your spouse will be financially secure after your death.

How long will I get a pension for?

That depends on how you choose to have your pension paid out.

Pension plans exist to help ensure that you'll have income for the rest of your life. This means that every pension plan is required to offer various life annuity options.

Single Life Annuity

With a basic single life annuity, you get a fixed monthly payment for as long as you live.

Joint and Survivor Annuity

With this choice, you'll get payments for life, and after your death, your spouse or another beneficiary will continue to get payments.

Since the payments tend to last longer, this usually means you'll get a lower monthly amount.

How much does a defined-benefit pension pay?

The formula for a defined benefit amount depends on the company, but it's usually linked to your salary, age, and how many years you spent at the company.

The amount also changes depending on which life annuity option you apply up for. A single life annuity will generally pay more than a joint and survivor annuity.

Do I have to pay taxes on my pension?

Typically, yes. Most pensions are taxable. However, certain types of disability and military pensions are partly or even entirely tax-free.

At the start of each year, you'll get a 1099 tax form from your pension provider. This form will show you the amount of your pension that's taxable.

Can I collect both Social Security and pension?

Yes, although the exact amounts you can collect depend on many factors.

Most employees are covered by Social Security, but some public sector workers may only have pensions, not Social Security.

If you have both, you can collect both. Having a pension doesn't necessarily mean you'll collect less social security.

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