Pension Break-Even Age Calculator

How old do you have to live for the lifetime annuity to be worth more than taking the lump sum? Enter your numbers and see the break-even age across a range of investment return assumptions.

What "break-even age" means

The break-even age is the age at which your cumulative annuity payments (reinvested at the assumed return rate) equal the lump sum also grown at that same rate. Before break-even, the lump sum is worth more on paper. After break-even, the annuity has delivered more total value.

What the calculator doesn't capture

• Survivor benefit. A joint-and-survivor annuity covers two lifetimes, but pays less per month. Use the J&S Election Calculator for spousal modeling.
• Investment risk. Break-even analysis assumes you earn the stated return consistently. A sequence-of-returns problem early in retirement can make the lump sum far less valuable than the table suggests.
• PBGC coverage limit. Private pension annuities are insured by the PBGC up to a maximum monthly benefit (2026: approximately $7,789/month for a single-life annuity starting at age 65). Above that threshold, plan-insolvency risk shifts the calculus.
• Taxes. Both lump-sum rollovers and annuity payments are taxed as ordinary income when received. The timing and structure matter. See the Pension Lump Sum Tax Guide.
• COLA (cost-of-living adjustment). Federal pension annuities (FERS/CSRS) are COLA-indexed. Corporate pensions typically are not. A COLA annuity has a higher real break-even advantage than this calculator shows for a fixed-dollar annuity.
• Interest-rate environment. Corporate lump-sum offers are sized using IRS § 417(e) segment rates. High-rate environments produce smaller lump sums — and often a lower implied annuity yield — than low-rate environments.
• Cognitive / management burden. The annuity requires zero ongoing decisions. A $750,000 IRA requires decades of disciplined management. Many retirees underperform their assumed return rate due to behavior, fees, or cognitive decline.

The implied yield framing

A complementary way to evaluate the annuity: what rate of return would the lump sum need to earn to match the annuity payments over your expected lifespan? If you expect to live to 85 and your implied yield (the discount rate that sets the annuity NPV equal to the lump sum) is 5%, you're being asked to bet you can beat 5% after fees, taxes, and behavioral drag — indefinitely. Many retirees can't. For the full NPV comparison with explicit longevity and survivor assumptions, use the Lump Sum vs Annuity Calculator.