What is High-3 vs High-5 salary averaging?

High-3 averages your three highest consecutive years of salary. High-5 averages five years. High-3 typically results in a slightly higher pension since it captures peak earning years more precisely. Federal FERS uses High-3.

How does early retirement reduce pension benefits?

Retiring before your full retirement age triggers a reduction, often 5% per year. Retiring 5 years early with a 5% reduction results in a 25% lower lifetime benefit. Some plans also use a vesting schedule.

What is a COLA in a pension context?

COLA (Cost of Living Adjustment) is an annual increase to your pension benefit to keep pace with inflation. Federal retirees under CSRS receive a COLA equal to the full CPI increase; FERS retirees get a reduced COLA (CPI minus 1%).

What is the survivor benefit option?

A survivor benefit reduces your pension payment to provide continued income to a spouse after your death. Federal employees under FERS can elect a 25% or 50% survivor benefit, which reduces the retiree's payment by 5% or 10% respectively.

Pension Calculator

Calculate your defined benefit pension amount using years of service, final salary, and benefit multiplier. Includes early retirement reduction, COLA, and High-3/High-5 averaging.

Years of Service ?

Final Average Salary ?

Benefit Multiplier (%) ?

Retirement Age ?

Annual Pension Benefit

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Monthly Pension Benefit —

Income Replacement Rate —

Estimated Lifetime Value (20 yr) —

Extended More scenarios, charts & detailed breakdown ▾

Years of Service

Final Average Salary

Benefit Multiplier (%)

Salary Averaging Method

Annual Salary Growth (%)

Annual Pension Benefit

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Effective Salary Used —

Monthly Pension Benefit —

Income Replacement Rate —

Professional Full parameters & maximum detail ▾

Years of Service

Final Salary

Year −2 Salary

Year −3 Salary

Year −4 Salary

Year −5 Salary

Salary Averaging

Benefit Multiplier (%)

Survivor Benefit Reduction (%)

COLA Rate (% per year)

Tax Bracket on Pension Income (%)

Monthly Social Security Benefit

Benefit Calculation

Average Salary Used —

Gross Annual Pension —

Survivor Benefit Reduction —

Net Annual Pension (after survivor) —

Monthly Income

Monthly Gross Pension —

Monthly After-Tax Pension —

Monthly Total with Social Security —

Projections

Monthly Pension at Year 10 (with COLA) —

How to Use This Calculator

Enter your Years of Service — total credited years in the pension plan.
Enter your Final Average Salary — check your plan document for whether it uses final year or a multi-year average.
Enter your plan's Benefit Multiplier — typically 1.5%–2.5% per year of service.
See your estimated Annual and Monthly Pension instantly.
Use the Early Retirement tab to see how retiring before full retirement age reduces your benefit.

Formula

Annual Pension = Years of Service × Final Average Salary × Benefit Multiplier

Early Retirement: Reduced Annual Pension = Full Pension × (1 − Years Early × Reduction Rate)

COLA Adjusted Year N: Starting Pension × (1 + COLA Rate)^N

Example

Example: 25 years of service, $75,000 final salary, 2% multiplier.

Annual Pension: 25 × $75,000 × 2% = $37,500/year
Monthly Pension: $3,125/month
Income Replacement Rate: 50% of final salary
With 2% COLA, pension grows to ~$3,812/mo by year 10

Frequently Asked Questions

The standard formula is: Annual Pension = Years of Service × Final Average Salary × Benefit Multiplier. For example: 25 years × $75,000 × 2% = $37,500/year ($3,125/month).
High-3 averages your three highest consecutive years of salary. High-5 averages five years. High-3 typically results in a slightly higher pension since it captures peak earning years more precisely. Federal FERS uses High-3.
Retiring before your full retirement age triggers a reduction, often 5% per year. Retiring 5 years early with a 5% reduction results in a 25% lower lifetime benefit. Some plans also use a vesting schedule.
COLA (Cost of Living Adjustment) is an annual increase to your pension benefit to keep pace with inflation. Federal retirees under CSRS receive a COLA equal to the full CPI increase; FERS retirees get a reduced COLA (CPI minus 1%).
A survivor benefit reduces your pension payment to provide continued income to a spouse after your death. Federal employees under FERS can elect a 25% or 50% survivor benefit, which reduces the retiree's payment by 5% or 10% respectively.

Related Calculators

Sources & References (5) ▾

Department of Labor — Types of Retirement Plans — U.S. Department of Labor
PBGC — Pension Benefit Guaranty Corporation — Pension Benefit Guaranty Corporation
IRS — Defined Benefit Plans — Internal Revenue Service
SSA — Government Pension Offset and WEP — Social Security Administration
FINRA — Pension Plans Overview — Financial Industry Regulatory Authority