Annuity Payout Calculator

How This Calculator Works

An immediate payout annuity converts a lump sum into a series of equal payments while the remaining balance keeps earning interest between payments. This calculator assumes interest compounds monthly and that the balance is drawn down to exactly zero at the end of the payout period — the same assumption used by insurance companies when they quote a "period certain" annuity payout. Toggle between solving for the monthly payment (if you know how long you want the money to last) or solving for how long a fixed monthly withdrawal will last, which is useful if you already know the income you need.

A Common Pitfall: Confusing Payout Rate With Return

A payment that looks generous relative to your principal isn't necessarily a high rate of return — part of every payment is simply your own principal being returned to you. The "Total Interest Earned" figure above isolates the portion of your payments that actually came from growth, which is the number worth comparing against other options like a CD or a diversified investment.

Deciding Between a Fixed Term and Lifetime Income

This tool models a fixed-period payout, not a lifetime annuity, since life-contingent payments depend on mortality tables rather than a pure math formula. If you're weighing an annuity against simply investing the lump sum and withdrawing from it yourself, it can help to first check how the principal would grow untouched using the investment calculator, and to think through your broader retirement income needs with the retirement calculator.