Take the lump sum or the monthly pension? See the trade-off.
A pension payout calculator compares taking a lump sum with the lifetime monthly pension, helping you weigh investing the lump against the security of a guaranteed check.
Many pensions offer a choice: a one-time lump sum or a monthly payment for life. The lump sum gives you control and can be invested or left to heirs, but you bear the investment and longevity risk. The monthly pension is guaranteed income you can't outlive, but usually stops at death (or is reduced for a survivor) and may not adjust for inflation.
One useful lens is the pension's payout rate, annual pension divided by the lump sum. If it's high relative to what you could safely earn investing, the pension is attractive; if low, the lump sum may win. But the guaranteed check has real value against market and longevity risk. Consider taxes, your health, survivor needs, and other income, this is illustrative, not advice.
It depends on the payout rate, your health and longevity, other income, and comfort with investing. The monthly check offers guaranteed, longevity-proof income.
Annual pension divided by the lump sum. A high rate favors the pension; a low rate may favor investing the lump sum yourself.
Market risk and longevity risk, you can't outlive it. That security has real value the raw numbers don't fully capture.
See the exact formula and a worked example on our methodology page.