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Pension Lump Sum vs Annuity Calculator

Compare accepting a guaranteed monthly pension against taking a lump sum and investing it yourself to determine which option better matches your retirement income needs.

Quick answer: Compare a pension guaranteed monthly annuity against taking the lump sum and generating your own income from it at an assumed investment return. Enter Lump Sum Offer, Guaranteed Monthly Pension, Assumed Investment Return, and Years of Payments Expected to personalize the estimate. It returns Lump Sum Future Value If Invested, Total Guaranteed Pension Payments, and Level Monthly Draw From Lump Sum so you can compare the impact before choosing a next step. Use it to compare long-term value, tax impact, risk, time horizon, and contribution choices.

SWReviewed by SwitchWize Research Desk · Last reviewed July 1, 2026
Lump Sum Future Value If Invested
$1,287,561
Lump Sum Future Value If Invested
$1,287,561
Total Guaranteed Pension Payments
$660,000
Level Monthly Draw From Lump Sum
$1,933
Diagnostic

The stated pension pays $2,200 a month; a level draw designed to exhaust the lump sum over 25 years is about $1,933 a month.

Over the selected period, stated pension payments total $660,000; compare survivor, COLA, plan-guarantee, tax, liquidity, and investment-risk terms separately.

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What to do next

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Your action plan
  1. 1

    Compare the leading option against your current setup

    Compare a pension guaranteed monthly annuity against taking the lump sum and generating your own income from it at an assumed investment return.

  2. 2

    Check the assumptions before using the result for a high-stakes decision

    Assumptions change the answer, especially when rates, taxes, or timing matter.

  3. 3

    Save the result to Money Map or use the linked next action

    Turn the result into a prioritized action instead of treating it as a one-off number.

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This is an educational estimate, not tax, legal, investment, or lending advice. Tax rules, rates, and eligibility change and depend on your full situation. Confirm with a qualified professional or the provider before acting.

Calculator action path

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Frequently Asked Questions

Everything you need to know.

What does an example Pension Lump Sum vs Annuity Calculator calculation look like?
Using this calculator's own default assumptions, a lump sum offer of $300,000, guaranteed monthly pension of $2,200 and assumed investment return of 6% produces an estimated lump sum future value if invested of $1,287,561 and total guaranteed pension payments of $660,000. Enter your own numbers above to see how it changes for your situation.
What happens if I live longer than my expected payment period?
The guaranteed annuity continues paying you for life regardless of how long you live, while a lump sum you've invested can be depleted if you outlive your withdrawals. This is the core trade-off: the annuity provides longevity protection at the cost of giving up the remaining balance when you pass, whereas the lump sum lets you potentially leave money to heirs but requires you to manage the risk of running out.
How does my investment return assumption affect this decision?
A higher assumed return makes the lump sum more attractive on paper because your invested balance grows larger, potentially funding higher monthly withdrawals than the annuity offers. However, actual returns fluctuate year to year, and market downturns early in retirement can reduce the lump sum's real purchasing power. The annuity removes this variability entirely by locking in a fixed payment, making it predictable but inflexible if returns exceed your assumption.
Is the Pension Lump Sum vs Annuity Calculator free to use?
Yes. SwitchWize calculators are free, and you do not need an account to run scenarios or view the result.
Does using the Pension Lump Sum vs Annuity Calculator affect my credit score?
No. Using a calculator does not trigger a credit check. A credit impact can occur only if you apply directly with a lender, card issuer, or provider.
Are the results personalized financial advice?
No. Calculator outputs are educational estimates based on the inputs you enter. Review assumptions and confirm terms directly with providers before making a financial decision.
What should I do after seeing the result?
Use the recommendation module on this page to compare brokerage accounts, or run Money Map to compare this investing & retirement decision with your other opportunities.
How does SwitchWize choose related offers?
Related offers are matched by the calculator surface (brokerage) and ranked using SwitchWize data such as rate, fees, trust signals, product fit, and switching friction. Paid relationships do not change organic ranking order.
How fresh are the rates and offers shown?
Rate and offer data is reviewed on a recurring cadence and every offer module shows review context or links to the methodology and disclosure pages.
Where can I see the ranking methodology?
The SwitchWize methodology page explains how rate freshness, editorial review, affiliate disclosure, and category ranking factors work.
Can Money Map use this result?
Yes. Money Map is the broader diagnostic path: it compares savings, mortgage, cards, and debt so you can see whether this calculator result is your highest-impact next move.

Why This Matters

Choosing between a lump sum and a guaranteed annuity is a one-time decision that locks in your retirement income strategy for decades. This calculator reveals the trade-off: the annuity offers certainty and removes investment risk, while the lump sum offers growth potential but requires you to manage withdrawals and market exposure. Understanding how your investment returns and life expectancy affect each option helps you choose the strategy that aligns with your risk tolerance and spending plans.

How to Use It

  1. 1Enter the lump sum amount your pension plan is offering you.
  2. 2Enter the guaranteed monthly pension payment you would receive if you chose the annuity option.
  3. 3Enter your assumed annual investment return if you take the lump sum and invest it.
  4. 4Enter how many years you expect to receive payments in retirement.
  5. 5Review the three outputs: your total guaranteed pension payments over the period, the projected future value of your invested lump sum, and the sustainable monthly income you could draw from that lump sum.
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