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Annuity Payout Calculator

Find the monthly income a lump sum can pay over a fixed number of years while the rest keeps earning interest, or find out how long your money lasts if you take a set amount each month.

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How to use the annuity payout calculator

  1. Choose what to find: the monthly payout for a set period, or how long a chosen payment lasts.
  2. Enter the starting balance: the lump sum, annuity value or savings you will draw from.
  3. Enter the annual interest rate the remaining balance earns.
  4. Enter the payout period in years, or the monthly payment you want.
  5. Read the payout or the time it lasts, the total paid out, and the yearly table of what is left.

The payout formula

Monthly payout M = P × i ÷ (1 − (1 + i)^−n) How long n = −ln(1 − P × i ÷ M) ÷ ln(1 + i) P = starting balance, i = annual rate ÷ 12, n = number of monthly payments

This is the same math as a loan, run in reverse: instead of you paying the lender, the balance pays you. Each month the balance earns interest at i, and the payment then takes out the interest plus a slice of principal. The payout is set so that the last payment leaves exactly zero. Payments are at the end of each month, and the rate is a yearly rate compounded monthly.

If your chosen payment is no more than the first month's interest, the balance never falls and the money lasts indefinitely.

Worked example

The defaults are $250,000 at 5%, paid out over 20 years.

  • Monthly rate: i = 0.05 ÷ 12 = 0.0041667, and n = 240
  • (1.0041667)^240 = 2.712640
  • Payout: $250,000 × 0.0041667 × 2.712640 ÷ 1.712640 = $1,649.89 a month
  • Total paid over 240 payments: $395,973.44, of which $145,973.44 is interest (the exact payment is $1,649.8893 before rounding to the cent)

Over 30 years the payout drops to $1,342.05. Taking $2,000 a month instead, the same $250,000 lasts 14 years 9 months: 176 payments of $2,000 and a final one of $1,874.70. At $1,000 a month you never touch the principal, because the first month's interest is $1,041.67.

Payout periods compared

For $250,000 at 5%:

Payout period Monthly payout Total paid out
10 years $2,651.64 $318,196.55
15 years $1,976.98 $355,857.13
20 years $1,649.89 $395,973.44
25 years $1,461.48 $438,442.53
30 years $1,342.05 $483,139.46

Longer payouts lower the monthly check but pay more in total, because the balance earns interest for longer.

A fixed payout vs. a life annuity

This calculator shows a period-certain payout: it ends when the money runs out, whether you are alive or not. An insurer's life annuity pays for as long as you live, however long that is, and prices the payments using mortality tables, so it can pay more per month than a fixed-period drawdown of the same amount at the same rate. In return, the money is usually gone when you die unless you buy a guarantee period or refund option. Insurers' quotes also include their own charges, so treat this result as a benchmark for comparing offers. To see how the balance grows before payouts begin, use the annuity calculator.

Frequently asked questions

How much does a $100,000 annuity pay per month?

At 5% over 20 years, a $100,000 balance pays $659.96 a month; the payout scales in proportion to the balance. A lifetime annuity from an insurer may pay more or less depending on your age, sex and current rates.

What happens if I take more than the payout?

The balance runs out sooner. Switch to "How long it lasts" and enter the amount you want to see exactly when the money is used up and how big the final payment is.

Does the calculator include taxes?

No. Payments from a traditional IRA or 401(k) are taxed as ordinary income, and annuities bought with after-tax money are taxed only on the earnings part of each payment. Subtract your expected tax to see what you will spend.

Can I use it for withdrawals from investments?

Yes, as long as you enter a cautious, steady rate. Investment returns vary, and a few bad years early on can shorten how long the money lasts, so leave a margin.

Related calculators

  • Annuity Calculator — What an annuity or savings plan grows to from a starting principal plus yearly or monthly additions.
  • Pension Calculator — Lump sum or monthly pension? Compare the present value of the payments with the lump sum and find your break-even age.
  • Retirement Calculator — See what your savings grow to by retirement, how long they last, and how much more to save each month.
  • RMD Calculator — Your required minimum distribution from an IRA or 401(k) for any year, using the IRS Uniform Lifetime Table.

Results are estimates for educational purposes and are not financial, tax or legal advice. See our disclaimer.