Easy way to calculate a pension?

Question

I have 5 years of service with my company and I am fully vested. How is an easy way to calculate what my pension would be when I turn 50? I am currently 30 years of age and would be able to draw on my pension in 20 years when I turn 50? I've asked my benefits office to calculate this for me but they have told me it will be about a week to get the info back to me. Just wondering if anyone could help me figure this out. Any help would be appreciated.

Can anyone tell me what a monthly "HAPC" is?

Answer 1

A defined benefit pension plan is based on a plan formula.

These are specific to each plan. They can be very simple or very complicated.

The most common use three pieces of information: pay, service, and age.

For instance, the plan could give you 1% of pay for each year of service.

A person making $40,000/yr with 5 years of service would be entitled to 1% times 5 times $40,000, or $2,000/year beginning at age 65.

If a person retires earlier than 65, they typically get a reduced benefit to make up for the fact that it is paid for a longer period of time. 50 is uncommonly early, it is likely that your benefit would be reduced by 60% or more if you took it at 50.

The devil, of course, is in the details, different plans have different rules for calculating pay or how they average it. There are different rules for counting service. Early retirement reductions are different. Also, all kinds of other complications can come into play if the plan formula takes into account your employer's contributions to Social Security in the benefit formula or has been changed recently.

There is no easy way to calculate a pension without knowing a lot more about the plan and a lot more about you.

Answer 2

Based only on the information you gave, there is not even a hard way to calculate your pension. Is this a defined benefit or a defined contribution plan? How much has been contributed? How is it invested? Without answers to this type of question, any answer is not even an educated guess.