How to Use the DB vs 401(k) Pension Calculator
In the US, a defined-benefit (DB) pension pays a fixed annual amount for life, calculated from your final average salary, years of service, and a benefit multiplier set by your plan (commonly around 1-2%). A defined-contribution plan like a 401(k) instead builds an account balance from ongoing contributions that you invest and manage yourself.
This calculator projects your final annual salary using your current salary and expected annual growth rate, then estimates your DB pension using your benefit multiplier and years of service. For the 401(k), it simulates yearly contributions (as a % of salary) growing at your expected investment return until retirement.
Because a DB pension pays income for life and a 401(k) provides a lump sum, the two numbers are not directly comparable — a longer life expectancy or lower investment returns could make the DB pension more valuable than it first appears.
Frequently Asked Questions
It depends on how you value the two payout types: a DB pension pays a fixed amount every year for life, while a 401(k) gives you a lump-sum balance you manage yourself. Longer service and a higher benefit multiplier favor the DB pension; higher investment returns favor the 401(k).
A defined-benefit (DB) pension pays an annual amount for as long as you live, while a defined-contribution plan like a 401(k) gives you an account balance at retirement. This calculator shows both so you can compare an income stream against a lump sum.