Compare single-life and joint-and-survivor pension values or calculate how many survivor-payment years are needed for the joint option to break even.
Pension Survivor Benefit Formula
A joint-and-survivor pension trades a smaller payment while the pensioner is alive for continued income to a survivor.
Single-life value:
PV_{single}=PV(SinglePayment,r,g,RetireeYears)
Joint-and-survivor value:
PV_{joint}=PV(JointPayment,r,g,RetireeYears)+PV(SurvivorPayment,r,g,SurvivorYears)/(1+r)^{RetireeYears}
The survivor payment is:
SurvivorPayment=JointPayment*SurvivorPercent
Variables:
- r is the discount rate
- g is annual COLA
- RetireeYears is the pensioner's payment period
- SurvivorYears is the survivor's payment period
Comparison mode values both streams under entered longevity assumptions. Break-even mode finds how long survivor payments must continue for the joint option to match the single-life option.
COLA is applied to the joint payment while the pensioner is alive and continues into the survivor period.
Present value is only one consideration; guaranteed lifetime income and household risk tolerance also matter.
Common Survivor Election Structures
Plans may offer several continuance percentages with different initial pension reductions.
| Election | Payment while pensioner lives | Payment after pensioner's death |
|---|---|---|
| Single life | Highest | Usually none |
| 100% joint and survivor | Lower | 100% continues |
| 75% joint and survivor | Lower | 75% continues |
| 50% joint and survivor | Moderately lower | 50% continues |
Example Problems
Example 1: Compare two elections.
Compare $4,200 single life with $3,700 joint and survivor, a 75 percent continuation, 20 pensioner years, and 10 survivor years.
Example 2: Find survivor break-even.
The calculator adds survivor years one at a time until the discounted joint stream reaches the single-life value.
Frequently Asked Questions
Is the survivor payment based on the original or current pension?
Many COLA plans apply the percentage to the pension in effect at death, which is how this model works.
What if the survivor dies first?
Some plans have a pop-up provision that raises the pensioner's payment; this calculator does not model that feature.
Does the higher present value identify the best election?
No. The joint option can be valuable insurance even when its expected present value is lower.
