A pension often offers a lump sum or lifetime monthly payments. Compare their value.
This calculator compares a pension lump-sum offer against the present value of the monthly pension payments you would otherwise receive, discounted at a rate you choose.
A pension often lets you take a one-time lump sum instead of a lifetime or fixed-term stream of monthly checks. To compare them fairly, the tool discounts the future monthly payments back to today's dollars using your chosen rate, then sets that present value against the lump sum. If the present value of the payments exceeds the lump sum, the monthly option is worth more on paper.
The discount rate reflects what you could earn on the money or the return you require, and it drives the result heavily: a higher rate makes the lump sum look better, a lower rate favors the payments. This model uses a fixed number of collection years and ignores taxes, inflation adjustments, and survivor benefits that a real pension may include. It also does not account for longevity risk, so weigh it alongside your health and other income. Not financial advice.
It reflects the return you could earn elsewhere or require, and it strongly affects which option looks better.
When its payments discounted to today exceed the lump sum, the stream is worth more, especially if you expect to collect for many years.
No, the comparison ignores taxes, inflation, and survivor options, which can change the real value.
See the exact formula and a worked example on our methodology page.