Enter your current age and planned retirement age to estimate a simplified “age-gap factor” (a total percentage based on years until retirement).
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Age Factor Formula
The following simplified formula is used by the “Standard” tab above to estimate a total factor (in percent) from the number of years between your current age and planned retirement age, assuming a constant accrual of 2.5 percentage points per year:
AF(\%) = (RA - CA)\times 2.5
Variables:
- AF is the estimated total factor (%)
- RA is the retirement age (years)
- CA is the current age (years)
To calculate the estimated total factor, subtract the current age from the retirement age to get the years until retirement, then multiply by 2.5 (which represents 2.5 percentage points per year). Many real-world plans do not use this linear approach; they may use service credit and plan-specific age-factor tables or caps.
What is an Age Factor?
In pension and retirement benefit formulas, an “age factor” or “multiplier” is typically a plan-defined percentage used (often along with years of service and a compensation measure) to determine a benefit amount. It commonly depends on factors such as retirement age, years of service, and the specific plan/tier. On this page, “age factor” is used as shorthand for a simplified estimate based on the time between current age and planned retirement age.
How to Calculate Age Factor?
The following steps outline how to calculate the simplified estimate used by this calculator:
- Determine your current age (CA).
- Determine the age at which you plan to retire (RA).
- Compute the years until retirement: (RA − CA).
- Multiply by the assumed accrual rate (default 2.5 percentage points per year) to get AF(%).
- 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 (RA − CA = 25 years, so AF = 25 × 2.5 = 62.5%).