Glossary Term 4 min read Updated September 2026

Pension Breakeven Age - Definition, Meaning & Calculation

Definition and meaning of breakeven age when evaluating lump-sum buyouts vs lifetime monthly pension checks.

Verified by Certified Pension Actuaries (FSA / EA / CFA) • IRS 417(e) Methodology

Definition

Pension Breakeven Age is the exact chronological age at which the cumulative monthly pension checks received by a retiree equal or surpass the total value of taking an upfront lump-sum buyout.

Nominal vs. Discounted Breakeven

Nominal Breakeven: The age at which raw cumulative cash payouts equal the lump sum (e.g. $450k lump sum ÷ $3k/mo = 150 months = 12.5 years = Age 74.5).
Discounted Breakeven: The age at which cumulative payouts match the lump sum after accounting for the compound investment growth the lump sum could have earned.

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Authoritative References & Official Regulatory Sources

Verified citations from official government databases, actuarial research bodies, and statutory documentation.

Official Citations

Internal Revenue Service (IRS.gov) U.S. Government

IRS Notice: Minimum Present Value Segment Rates (§ 417(e))

Statutory 3-tier corporate bond yield curve segment rates used by corporate plan sponsors to calculate legal minimum lump-sum buyouts.

Inspect Regulatory Source

Pension Benefit Guaranty Corporation (PBGC.gov) Federal Agency

PBGC Maximum Monthly Guarantee Tables for Defined Benefit Plans

Statutory federal insurance guarantee limits protecting private pension participants in the event of corporate plan termination or bankruptcy.

Inspect Regulatory Source

Society of Actuaries (SOA.org) Actuarial Standard

Society of Actuaries (SOA) Pri-2012 & Pub-2010 Mortality Study Tables

The institutional empirical mortality tables and generational mortality improvement scales (MP-2021) powering actuarial present value projections.

Inspect Regulatory Source

Social Security Administration (SSA.gov) U.S. Government

Social Security Administration: Actuarial Period Life Table

Official U.S. decennial life expectancy and survival probability curves for male and female retirees across single and joint age horizons.

Inspect Regulatory Source

Definition

Nominal vs. Discounted Breakeven

Authoritative References & Official Regulatory Sources

IRS Notice: Minimum Present Value Segment Rates (§ 417(e))

PBGC Maximum Monthly Guarantee Tables for Defined Benefit Plans

Society of Actuaries (SOA) Pri-2012 & Pub-2010 Mortality Study Tables

Social Security Administration: Actuarial Period Life Table

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