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Pension Formula
How Is a Pension Benefit Calculated? The Defined Benefit Formula Explained
Most pensions use one formula: Years of Service × Benefit Multiplier% × Final Average Salary ÷ 12. But three hidden variables — your salary averaging method, payout option, and early retirement reductions — can shift that number by hundreds of dollars per month. This guide breaks down each one with real numbers.
📅 May 2026
⏱ 6 min read