Annuity Payout CalculatorFree online financial calculator — instant results, no sign-up
Monthly payout from a lump sum over a period.
Estimates only, based on the inputs and assumptions shown. This is not financial, investment, tax, or legal advice. Prices, rates and local rules may change; crypto scenarios do not predict returns. Confirm important decisions with a qualified professional.
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About the Annuity Payout Calculator
This calculator determines the fixed monthly income generated by liquidating an initial lump sum over a specified number of years while the remaining balance continues to earn an annual investment return. It is designed for retirees, financial planners, and individuals evaluating fixed-period annuity structures or structured drawdown schedules.
- Starting balance
- The initial lump sum principal invested in the annuity, measured in dollars (typically $1,000 to $10,000,000).
- Return
- The estimated annual interest rate or investment return on the remaining principal, entered as a percentage (typically 0% to 12%).
- Payout years
- The fixed duration of the distribution period in years, which determines the total number of monthly payments (typically 5 to 40 years).
Formula and method
PMT = P × (r × (1 + r)^n) / ((1 + r)^n − 1) Total Payout = PMT × n
- PMTMonthly payout amount
- PStarting balance (principal)
- rMonthly interest rate (annual return percentage divided by 100, then divided by 12)
- nTotal number of monthly payout periods (payout years × 12)
The calculation uses the standard amortization payment formula (PMT) with monthly compounding, converting annual return into a monthly rate and payout years into total months. The total paid out is calculated by multiplying the exact monthly payment by the total number of months, with values rounded to two decimal places for currency display.
Worked example
These are the calculator's starting values and the results it actually produces for them.
Inputs
- Starting balance500000 $
- Return5 %
- Payout years25
Results
- Monthly payout$2,922.95
- Total paid out$876,885.06
How to use the Annuity Payout Calculator
- 1Convert the annual return percentage into a monthly decimal interest rate by dividing by 1,200.
- 2Multiply the payout years by 12 to find the total number of monthly payment periods.
- 3Apply the fixed annuity payment formula to find the monthly payout amount that fully depletes the balance at the end of the term.
- 4Multiply the monthly payout by the total payment count to calculate the total cash distributed over the entire period.
Reading your result
The 'Monthly payout' shows the fixed dollar amount you receive at the end of each month throughout the chosen duration. The 'Total paid out' reflects the sum of all monthly installments, where any amount beyond your starting balance represents total compounding interest earned during the liquidation period.
Limitations
The model assumes a constant, uninterrupted rate of return and level payments across the entire term, without adjusting for market volatility, inflation, account maintenance fees, or surrender charges. It also models an annuity certain (fixed period) rather than a life-contingent annuity, meaning payments cease at the end of the specified years regardless of life expectancy, and it does not account for income tax liabilities.
Common questions
What happens to the account balance at the end of the payout years?+
Because this calculates an annuity certain term structure, the principal and all accrued interest are fully distributed by the final month, leaving an account balance of zero.
How does this differ from a lifetime annuity?+
A lifetime annuity pays income for the rest of your life based on mortality tables and underwriting, whereas this calculator models a fixed-term annuity where payments last strictly for the designated number of years.
Are the monthly annuity payouts subject to taxes?+
Generally, if funded with pre-tax dollars (like a traditional IRA), the entire distribution is taxable as ordinary income. If purchased with after-tax funds, only the portion representing interest earnings is taxable under the IRS exclusion ratio.
Does the calculator save my information?+
Calculations run in your browser. While signed in, inputs and results are automatically recorded in account history; saving a result creates a separate saved record.
Further reading
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Results are estimates for informational purposes and are not financial, medical or legal advice.