Annuity Payout Calculator
Calculate your monthly payout from a lump sum annuity based on the principal, interest rate, and payout period.
Monthly Payment
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Total Paid Out
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Interest Earned
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What is Annuity Payout Calculator?
An annuity payout calculator determines how much monthly income you can draw from a lump sum over a set period while earning interest. This is the reverse of the savings annuity — instead of building a nest egg, you're systematically drawing it down. It's commonly used to plan retirement income from savings, pension lump sums, or insurance settlements.
How to use
- 1 Enter your lump sum (present value) — the amount you're starting with.
- 2 Enter the annual interest rate the funds will continue to earn during the payout period.
- 3 Enter the number of years you want the payout to last.
- 4 Your monthly payment, total amount paid out, and total interest earned appear instantly.
- 5 Adjust the years to balance income level against how long the money lasts.
Formula
Example calculation
Lump sum of $500,000, 5% annual rate, 25-year payout: r = 0.05/12 ≈ 0.004167, n = 300. Monthly payment ≈ $2,923. Total paid: $876,900. Interest earned: $376,900.
Frequently asked questions
What happens if I outlive the payout period?
With a fixed-period annuity, payments stop when the term ends. To avoid outliving your money, choose a longer payout period, purchase a lifetime annuity from an insurer, or maintain a buffer in other accounts.
Is the interest rate realistic?
Current fixed annuity rates range from 3%–6%. For planning, use a rate that matches what your insurer or investment account actually pays. Overstating the rate will make payouts appear higher than they'll be.
How does this differ from a mortgage calculation?
The math is identical — a mortgage is essentially a lender's annuity payout on the money they lent you. The same present-value formula applies to both loan payments and income drawdowns.
Can I take more or less than the calculated amount?
If you take more, you'll deplete the principal faster and may run out before the period ends. If you take less, the account grows and could last longer or leave a remainder.
What is total interest earned?
It's the difference between total payouts and the original lump sum. This is real money your principal earns during the drawdown period — it meaningfully extends how long a given lump sum can sustain you.