Scott Tucker Solutions, Inc. Retirement Planning Tools
Retirement decision tool

Should you take the pension, or the lump sum?

Before you sign anything, run your actual offer through the numbers. See what your pension is really worth today, and how that compares to the check they're offering instead.

Step one

Enter your offer

These numbers come straight off your pension election paperwork.

The Pension

If you're married, this matters a lot. A single-life pension stops paying the moment you die — your spouse would receive nothing further from it. Most private pension plans legally require your spouse's written, notarized consent before you're allowed to choose this over a joint-and-survivor annuity.

$ /mo

The amount offered under the pension election you've chosen above.

%

Leave this at 0% if your pension doesn't increase over time — most private-sector pensions don't.

The Lump Sum
$

The one-time payout amount shown on your election paperwork.

%

What you'd realistically expect to earn investing the lump sum. This rate is also used to translate your pension into today's dollars, below.

Your Timeline

This is your own estimate, not a guarantee — but it stands in for how long you'll receive the pension, and moves the answer more than almost any other assumption. It's worth trying a few different ages.

Step two

See how they compare

At a 8.5% assumed return, your single-life pension is worth $152,475 less than the lump sum offer, in today’s dollars — about a 30% difference.

Lump sum offer $500,000 Higher in today's dollars
Present value of pension (single-life) $347,525 $152,475 less than the lump sum
Total pension paid out (single-life) age 62–90 · nominal $1,030,342
Lump sum if invested by age 90 $4,909,109

How the money moves over time

$0$1.0M$2.0M$3.0M$4.0M$5.0M626772778287
Pension payments received (cumulative) Lump sum, if invested and growing Lump sum offer (unchanged)

In raw dollars, your pension checks add up to more than the $500,000 lump sum by about age 78 — after roughly 17 years of payments. But if that lump sum were invested at 8.5% and left to grow, it would likely stay ahead of your total pension checks all the way through age 90.

Before you decide

What this doesn't capture

  • Taxes. Pension checks are taxed as ordinary income as you receive them; a lump sum is typically only tax-free if it's rolled directly into an IRA or another qualified plan.
  • Market reality. The return above is a flat, steady average — actual markets move up and down, sometimes sharply, especially early in retirement.
  • Survivor elections. If you're married, federal law generally requires your spouse's written, notarized consent before you can waive a joint-and-survivor pension in favor of a single-life pension or this lump sum — it exists to stop them losing income without knowing. Use the toggle above to label which pension you're comparing; either way, this tool only projects through the age you plan for, and doesn't add extra years of payments for a surviving spouse.
  • Plan funding. A pension is only as strong as the plan behind it. If it's a private-sector plan, ask about PBGC insurance limits.
  • The rest of your picture. Other savings, income, debts, and your own health and family history all belong in this decision.

This calculator is for illustration only. It isn't tax, legal, or investment advice.

Talk it through with Scott Tucker Solutions