π΅ Annuity Payout Calculator
Convert a lump sum into steady payments over any term you choose.
Payment per Period
Estimates for planning only, not financial advice.
How to Use This Calculator
Enter the lump sum you are starting from, the annual rate the remaining balance earns while you draw it down, how many years the payouts should last, and how often you want paid. You get the payment amount, the total you will receive, and how much of it is interest earned along the way.
Enter your Lump Sum, the full balance available on day one of the payout period.
Enter the Annual Rate the untouched balance keeps earning during the payout, and the Payout Years the money must last.
Pick the Payment Frequency: monthly, quarterly, or annually.
Read your payment, the total received over the term, and the interest portion, then try a longer or shorter term to feel the trade-off.
The Payout Formula
Every payment is split the same way a mortgage payment is: part pays the period interest on the shrinking balance, and the rest reduces principal. Early payments are interest-heavy; late payments are almost all principal. Because the balance keeps earning while you withdraw, the total you receive is always larger than the starting lump sum.
Worked Example
You retire with $500,000, keep it earning 5 percent a year, and want monthly checks for 25 years. The monthly rate is 0.05 / 12 = 0.0041667 and there are 300 payments. Payment = 500000 x 0.0041667 / (1 - 1.0041667^-300) = $2,922.95 a month. Over 25 years you receive $876,885 total: your original $500,000 plus $376,885 of interest earned during the payout. Shorten the term to 20 years and the check rises to about $3,299.78; stretch it to 30 years and it falls to about $2,684.11.
Term Payouts vs Guaranteed Income
This calculator empties the account to exactly zero on the last payment, which is perfect planning math but risky real life: live one year longer than the term and the checks stop. That longevity risk is what lifetime annuity contracts and Social Security exist to cover. A common strategy is to use term payouts from savings for the years you can model, and guaranteed lifetime income for the years you cannot.
Estimates for planning only, not financial advice.
Frequently Asked Questions
How is an annuity payout calculated?
Each payment has two jobs: cover that period interest on the remaining balance, and chip away at the principal. The payment is lump sum x r / (1 - (1+r)^-n), with r the rate per period and n the number of payments. This is the same amortization math as a mortgage, running in reverse: instead of borrowing and repaying, you are depositing and withdrawing.
How long will my money last at a given withdrawal?
Solve the formula backwards: with balance B, monthly rate r, and payment P, the money lasts n = -ln(1 - B x r / P) / ln(1+r) months, as long as P exceeds the monthly interest. If your payment is smaller than the interest earned each month, the balance grows forever and the money never runs out.
What is the difference between a term payout and a life payout?
A term payout empties the account over a fixed number of years, and this calculator models exactly that. A life payout from an insurer lasts as long as you live, pooling longevity risk across many buyers, which is why its monthly check is usually smaller than a term payout over your life expectancy.
Are annuity payouts taxable?
It depends on the money source. Payouts from a pre-tax retirement account are taxed as ordinary income. Payouts from a non-qualified annuity bought with after-tax dollars use the exclusion ratio: each payment is part tax-free return of principal and part taxable gain, until you recover your full cost basis.
Why does a longer payout period lower my check so much?
Two forces work against you: the same lump sum is sliced into more payments, and more of each early payment goes to interest rather than principal. Stretching $500,000 at 5 percent from 20 to 30 years drops the monthly check from about $3,300 to about $2,684, because you are asking the money to cover 120 extra months.
What rate should I use for the projection?
Use the rate the remaining balance actually earns while you draw it down. For money kept in safe bonds that might be 4 to 5 percent; for money still invested in a balanced portfolio, 6 to 7 percent is a common planning assumption. A guaranteed annuity contract uses the insurer credited rate from your contract.