Annuity Payout Calculator
Plan your retirement savings, calculate required nest egg, and determine safe withdrawal rates for financial independence.
Annuity Details
Annuity Planning Tips
- • Life annuities provide guaranteed income for life but no inheritance
- • Fixed period annuities offer higher payments but limited duration
- • Consider inflation protection for long-term purchasing power
- • Joint life annuities provide security for surviving spouses
- • Diversify retirement income with multiple sources
Annuity Payments
Monthly Payment
Based on life annuity
Quarterly Payment
Every 3 months
Annual Payment
Yearly payout
Payment Summary
Tax Impact
Payout Comparison
Payment Schedule (First 10 Years)
Annuity Strategy
- • Consider your health and family longevity history
- • Evaluate need for guaranteed vs. flexible income
- • Factor in inflation protection for long-term purchasing power
- • Compare with other retirement income options
- • Consider laddering annuities for flexibility
- • Review annuity fees and surrender charges
How it works
An annuity payout calculator finds the regular income a lump sum can provide over a set period at a given rate — the reverse of saving. It spreads the principal plus its earnings into level payments that exhaust the balance by the end of the term.
Annuity payment
PMT = PV · r / [1 − (1 + r)⁻ⁿ]
- PV
- starting lump sum
- r
- rate per period
- n
- number of payouts
Worked example
- Lump sum PV = $500,000
- 5% annual rate
- 20-year payout (n = 20)
- PMT = 500,000 × 0.05 / [1 − 1.05⁻²⁰]
≈ $40,121 per year for 20 years.
Good to know
- A higher rate or shorter term raises each payout.
- A lifetime annuity from an insurer instead pays until death, pooling longevity risk.
- Payouts are partly return of principal and partly earnings, which affects how they're taxed.
Related Calculators
Frequently Asked Questions
How much income can a lump sum provide?
The level payout that exhausts a balance over a set term is PMT = PV × r / [1 − (1 + r)⁻ⁿ]. For example, $500,000 earning 5% supports about $40,100 per year for 20 years before the balance reaches zero.
How long will my money last at a given withdrawal rate?
If you withdraw less than the balance earns, it never runs out; withdraw more and the term is finite. Solving the payout formula for n gives the exact number of payments — small changes in rate or withdrawal size move the answer by years.
What is the difference between fixed-period and lifetime payouts?
A fixed-period payout spends the balance to zero by a chosen end date, with the amount set by math alone. A lifetime annuity from an insurer pays until death regardless of how long you live, trading some payout size for longevity protection.
How does the interest rate affect my payouts?
Higher assumed earnings raise every payment because the remaining balance keeps growing while it is drawn down. On a $500,000, 20-year payout, moving from 3% to 5% lifts the annual income from roughly $33,600 to $40,100.
Are annuity payouts taxable?
Payouts from pre-tax retirement accounts are generally fully taxable as ordinary income. For annuities bought with after-tax money, only the earnings portion of each payment is taxed — an exclusion ratio splits each payment into taxable earnings and tax-free return of principal.