How this calculation works
The single-life stream stops at the entered first period. The joint stream then changes to the entered survivor share for the additional period. Both are valued at today using the equivalent monthly rate.
Present value = sum of each monthly payment divided by (1 + monthly discount rate) raised to its payment month.A worked example
At zero discount, 2,000 for 180 months plus 1,000 for 120 months totals 480,000. The 2,300 single-life payments total 414,000 over the first 180 months.
Good to know
Fixed nominal payments and user-selected durations. Cost-of-living adjustments, taxes, mortality probabilities and plan-specific protections are outside the comparison.
How the inputs affect the result
Run more than one duration scenario. A survivor benefit can change the outcome when payments continue for years after the original pensioner dies, especially at lower discount rates.
Later payments carry less value today when the discount rate is positive.
Where the calculation applies
Fixed nominal payments and user-selected durations. Cost-of-living adjustments, taxes, mortality probabilities and plan-specific protections are outside the comparison.
For a related calculation, see the Annuity payout calculator with withdrawal schedule.
A few questions, answered
Why use an effective annual discount rate?
The calculator converts it to a monthly equivalent so twelve months of discounting reproduce the stated one-year rate.
What does the “Discount future payments at 4%” setting illustrate?
Later payments carry less value today when the discount rate is positive.