Enter your current age and the age you plan to retire to calculate the age factor percentage. The age factor is used in various retirement benefit calculations.
Age Factor Formula
The following formula is used to calculate the age factor percentage:
AF = (RA - CA) * 2.5%
Variables:
- AF is the age factor (%)
- RA is the retirement age (years)
- CA is the current age (years)
To calculate the age factor, subtract the current age from the retirement age and multiply by 2.5%.
What is an Age Factor?
An age factor is a percentage used to determine retirement benefits based on the number of years until retirement. It is a critical component in pension plans, where it helps to calculate the retirement benefits an individual will receive. The age factor increases with the number of years left until retirement, incentivizing longer service.
How to Calculate Age Factor?
The following steps outline how to calculate the Age Factor:
- First, determine your current age (CA).
- Next, determine the age at which you plan to retire (RA).
- Use the formula AF = (RA – CA) * 2.5% to calculate the age factor (AF).
- Finally, calculate the Age Factor (AF) in percentage.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem:
Use the following variables as an example problem to test your knowledge.
Current age (CA) = 40 years
Retirement age (RA) = 65 years