Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
Better option
Take the monthly pension
Present value of pension
$376,332
Lump sum offer
$350,000
Difference
$26,332
Total nominal payments
$660,000
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How to use this
- 1Enter lump sum offer ($).
- 2Enter monthly pension ($).
- 3Enter years of payments expected.
- 4Enter discount / return rate (%).
- 5Read your better option on the right — it updates as you type.
- 6Hit Share to keep the scenario or send it to someone.
About this calculator
A lump sum you can invest versus a guaranteed monthly cheque. This compares the present value of the annuity against the cash offer.
Worked example
Using the values the calculator loads with:
Inputs
- Lump sum offer: 350000 $
- Monthly pension: 2200 $
- Years of payments expected: 25
- Discount / return rate: 5 %
Results
- Better option: Take the monthly pension
- Present value of pension: $376,332
- Lump sum offer: $350,000
- Difference: $26,332
- Total nominal payments: $660,000
What each field means
Inputs
- Lump sum offer ($)
- The lump sum offer used in the calculation, measured in $. Starts at 350000 $ so you have a working example on load.
- Monthly pension ($)
- The monthly pension used in the calculation, measured in $. Starts at 2200 $ so you have a working example on load.
- Years of payments expected
- The years of payments expected used in the calculation. Starts at 25 so you have a working example on load. Accepted range: 1–50.
- Discount / return rate (%)
- The discount / return rate used in the calculation, measured in %. Starts at 5 % so you have a working example on load. Accepted range: 0–15 %.
Results
- Better option
- Returned as a plain value and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Present value of pension
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Lump sum offer
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Difference
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Total nominal payments
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
How does the pension lump sum vs monthly annuity work?
A lump sum you can invest versus a guaranteed monthly cheque. This compares the present value of the annuity against the cash offer. The underlying maths is: PV of annuity = Σ payment ÷ (1+r)^t
What do I need to enter?
4 values: lump sum offer, monthly pension, years of payments expected, and discount / return rate. Each field starts with a sensible default, so you can change one number at a time and watch the result move.
What does the better option result mean?
It is returned as a plain value and updates live as you edit the inputs, so you can compare two or three versions of a scenario in a few seconds.
Is this calculator free, and do I need an account?
Yes, it's free, and no account is required. Nothing you type is stored on our servers — the maths runs entirely in your browser.
How accurate is the result?
It applies the standard formula exactly, so the arithmetic is precise. Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
Who is this tool for?
It's built for anyone comparing money scenarios before committing — budgeting a payment, sanity-checking a quote, or seeing what a change in rate or term actually costs.
Accuracy and limitations
- Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
- Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.
- This is educational maths, not financial advice. Check anything contractual with the lender or your accountant.
Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). Pension Lump Sum vs Annuity Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/pension-lump-sum
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/pension-lump-sum" target="_blank" rel="noopener">Pension Lump Sum vs Annuity Calculator — RevenueLab</a> (2026).</p>
Source: [Pension Lump Sum vs Annuity Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/pension-lump-sum) (2026).