Start with the offer in front of you
Use your pension administrator’s actual lifetime-income and lump-sum offers. Enter the annual pension payable at your chosen start age, with any early-retirement adjustment already included. Enter an investable lump sum available today, after any immediate tax or charges. Before pension start, the lump sum grows without withdrawals.
For Canadian pensions, some transfers are subject to prescribed limits. Amounts above the limit may have different tax treatment. The CRA’s registered pension plan lump-sum guidance explains the distinction. Use your statement’s amounts rather than assuming the entire commuted value transfers tax-free. Currency selection does not calculate country-specific tax law.
Compare the same spendable income
The pension increases at your chosen annual indexing rate after it starts. The tool applies your assumed effective pension tax rate, then asks the invested lump sum to fund that same monthly net income. A separate effective withdrawal-tax rate determines how much must leave the portfolio.
These are simplified, constant effective tax rates, not tax brackets. A mixed taxable and registered transfer can need a more detailed model. Enter investment returns after fees and annual investment-tax drag; the withdrawal-tax field covers tax on distributions. Avoid counting the same tax twice.
Payments occur at month end. Annual table rows show balances and cumulative income at year end. Remaining investments are reported before any tax on a future withdrawal or estate distribution. Once investments run out, the calculator tracks pension-equivalent income that they could no longer fund.
Account for a surviving partner
The pension switches to the survivor percentage at your assumed death age and continues through the selected comparison end age. The end age is measured on your age timeline, not your partner’s. Set survivor income to zero if there is no continuing pension. Setting death age equal to end age models payments for your entire comparison horizon.
This simplified model excludes guarantee periods, bridge benefits, changing tax rates, locked-in withdrawal restrictions, insurer or pension-plan credit risk, estate taxes, and market sequence risk. A survivor entitlement must come from your actual offer. There is no single “winner”: pension security and accessible capital serve different needs.
Keep the comparison with your plan
Bring the offer, assumptions and both alternatives into cinder.fi as a local comparison you can reopen. It does not automatically replace pension income or add the transfer to your accounts. Full retirement scenarios require the receiving account types, transfer restrictions and household details.