Annuity Payout Calculator
Enter your lump-sum balance, interest rate, and payout term to find your periodic payment. Or flip to Fixed Payment mode and enter the withdrawal you need to see how many years your fund will last. Choose monthly, quarterly, semi-annual, or annual payments, toggle between an ordinary annuity (end-of-period) or an annuity due (start-of-period), and get a full year-by-year schedule showing your balance, interest earned, and total payouts.
How this annuity payout calculator works
This calculator has two modes. In Fixed Length mode, you set a starting balance, an annual interest rate, a payout term in years, and a payment frequency, and the calculator finds the level periodic payment that exactly depletes the fund by the end of the term. In Fixed Payment mode you instead enter the withdrawal you need, and the calculator tells you how many years that balance will last. Under the hood both modes use the standard present-value-of-annuity formula. For an ordinary annuity (payments at end of period) the payment is PMT = PV * (r/k) / (1 - (1 + r/k)^(-n*k)), where PV is the present value, r is the annual rate as a decimal, k is the number of periods per year, and n is the number of years. An annuity due (payments at start of period) gives a slightly higher payment because the fund earns one fewer period of interest before each withdrawal; it is adjusted by dividing the ordinary-annuity payment by (1 + r/k).
Fixed length vs. fixed payment: which mode should you use?
Use Fixed Length when you know how many years you need income and want to find the largest safe withdrawal. This is common when you have a defined retirement horizon, a bridge period until Social Security or a pension starts, or a specific savings goal to fund over a set number of years. Use Fixed Payment when you have a target spending level and want to know whether your nest egg can sustain it. Enter your monthly living expenses as the periodic payment and your retirement savings as the balance. If the resulting duration falls short of your expected retirement length, you can either reduce the payment, increase the balance, or accept a lower interest rate assumption.
What the interest rate represents
The annual interest rate is the rate of return the fund earns while it is being drawn down. For a fixed annuity from an insurance company this is the guaranteed crediting rate stated in the contract. For a self-managed portfolio you would use a conservative expected return, typically based on the asset allocation you plan to hold in retirement. Using too high a rate will make the fund appear to last longer than it actually will; most retirement planners suggest using the after-inflation, after-fee return to get a real purchasing-power figure.
Limitations and real-world considerations
The calculator assumes a constant interest rate, no taxes, no fees, and no inflation. In practice, a variable annuity or portfolio will earn a fluctuating return, withdrawals are typically taxable, and inflation erodes purchasing power over time. A rough rule of thumb is to reduce the nominal rate by expected inflation (often 2-3%) to get the real rate, then compare the resulting payment with your inflation-adjusted spending needs. If longevity risk is a concern, consider pairing a fixed-term annuity with a smaller lifetime annuity that continues regardless of how long you live.
Estimated monthly payout for a $100,000 annuity (ordinary, fixed length)
| Annual rate | 10 years | 15 years | 20 years | 25 years | 30 years |
|---|---|---|---|---|---|
| 2% | $921 | $644 | $505 | $424 | $369 |
| 3% | $965 | $691 | $555 | $474 | $422 |
| 4% | $1,012 | $740 | $606 | $528 | $477 |
| 5% | $1,061 | $791 | $660 | $585 | $537 |
| 6% | $1,110 | $844 | $716 | $644 | $600 |
Approximate monthly payments based on a $100,000 lump sum at a range of interest rates and payout terms. Useful as a quick sanity check for your own inputs.
Frequently asked questions
What is the difference between an ordinary annuity and an annuity due?
An ordinary annuity pays at the END of each period (month, quarter, year). An annuity due pays at the START. Because an annuity due draws money out earlier, each payment is slightly larger for the same starting balance - equivalent to multiplying the ordinary-annuity payment by (1 + periodic rate). Most commercial annuities and loan repayments use the ordinary convention; rent payments and lease payments typically follow the annuity-due convention.
How much monthly income will $500,000 generate?
It depends on the interest rate and how long you need the income. At a 4% annual rate over 20 years, $500,000 generates roughly $3,030 per month (ordinary, monthly payments). At a 5% rate over the same term it rises to about $3,300. Use this calculator to test your own balance, rate, and term combination.
What happens to the balance at the end of a fixed-length annuity?
By design the balance reaches exactly zero on the last payment. The formula is derived to ensure that if the fund earns the stated interest rate throughout, the final payment exactly exhausts the account. If the actual return is higher than assumed, a residual balance remains; if lower, the fund will be depleted before the term ends.
Does inflation affect my annuity payment?
This calculator does not build in inflation adjustment. A level nominal payment loses purchasing power over time if prices rise. To account for inflation, subtract the expected annual inflation rate from your interest rate before entering it, or look for an inflation-indexed annuity product that links payments to a price index.
How is the total interest calculated?
Total interest is the difference between the sum of all payments you receive and the starting principal. If you receive $600 per month for 20 years (240 payments) from a $100,000 annuity, total payouts equal $144,000, so the fund earned $44,000 in interest during the payout phase. That interest represents the return you earned on the portion of the principal that had not yet been withdrawn.
Can I use this for an immediate annuity quote comparison?
Yes, as a benchmark. Enter the premium you are considering as the starting balance and the guaranteed interest rate from the insurer quote as the annual rate, then set the term to your expected payout period. The resulting monthly payment should be close to the insurer quote; differences arise from insurer profit margins, mortality credits for life-contingent products, and sales charges.