Financial · Live
Annuity Payout Calculator,
exact to the cent.
Enter your lump-sum balance, interest rate, and payout horizon to see your exact periodic income — monthly, quarterly, or annual — alongside the full year-by-year drawdown schedule and a declining balance chart.
Inputs
Your payout scenario
Payment frequency
Payment timing
Interest compounds each period. End of period (ordinary annuity) pays after interest accrues. Start of period (annuity due) pays before interest accrues.
Monthly payout
20 yrs · monthly
per month for 20 years
- Total paid out
- $791,946.89
- Interest earned
- $291,946.89
- Number of payments
- 240
Balance chart
Remaining balance over time
Schedule
Year-by-year drawdown
| Year | Opening | Interest | Withdrawals | Closing |
|---|---|---|---|---|
| Y1 | $500,000.00 | $24,660.78 | $39,597.36 | $485,063.42 |
| Y2 | $485,063.42 | $23,896.62 | $39,597.36 | $469,362.68 |
| Y3 | $469,362.68 | $23,093.33 | $39,597.36 | $452,858.65 |
| Y4 | $452,858.65 | $22,248.95 | $39,597.36 | $435,510.24 |
| Y5 | $435,510.24 | $21,361.37 | $39,597.36 | $417,274.25 |
| Y6 | $417,274.25 | $20,428.39 | $39,597.36 | $398,105.28 |
| Y7 | $398,105.28 | $19,447.66 | $39,597.36 | $377,955.58 |
| Y8 | $377,955.58 | $18,416.77 | $39,597.36 | $356,774.99 |
| Y9 | $356,774.99 | $17,333.11 | $39,597.36 | $334,510.74 |
| Y10 | $334,510.74 | $16,194.03 | $39,597.36 | $311,107.41 |
| Y11 | $311,107.41 | $14,996.69 | $39,597.36 | $286,506.74 |
| Y12 | $286,506.74 | $13,738.07 | $39,597.36 | $260,647.45 |
| Y13 | $260,647.45 | $12,415.05 | $39,597.36 | $233,465.14 |
| Y14 | $233,465.14 | $11,024.36 | $39,597.36 | $204,892.14 |
| Y15 | $204,892.14 | $9,562.52 | $39,597.36 | $174,857.30 |
| Y16 | $174,857.30 | $8,025.87 | $39,597.36 | $143,285.81 |
| Y17 | $143,285.81 | $6,410.61 | $39,597.36 | $110,099.06 |
| Y18 | $110,099.06 | $4,712.73 | $39,597.36 | $75,214.43 |
| Y19 | $75,214.43 | $2,927.95 | $39,597.36 | $38,545.02 |
| Y20 | $38,545.02 | $1,051.87 | $39,596.89 | $0.00 |
Complete guide
What is an annuity payout calculator?
An annuity payout calculator tells you exactly how much income a lump-sum balance can generate over a fixed number of years, given a steady interest rate. You enter three things: the starting balance, the annual interest rate, and the payout period — and the calculator returns the periodic payment that will draw the balance down to exactly zero by the final period.
This is the reverse of an accumulation calculation. Where a compound interest calculator asks "how large will my balance grow?", a payout calculator asks "how much can I withdraw each period without running out of money?" The math is the same present-value annuity formula used by actuaries, pension administrators, and financial planners worldwide.
The payout formula, explained
The formula solves for the fixed periodic payment (PMT) that exhausts a present value (PV) over n periods at rate r per period:
Where:
PV = starting balance
r = periodic rate = annual rate ÷ payments per year
n = total payments = years × payments per year
When the interest rate is zero, the formula simplifies to PMT = PV ÷ n — you simply divide the balance evenly across all periods. For any rate above zero, compound interest means the balance earns income while it is being drawn down, so each periodic withdrawal can be larger than a simple equal split.
Worked example. A $500,000 balance at 5% annual interest, paid monthly over 20 years:
n = 20 × 12 = 240
PMT = 500,000 × 0.004167 / (1 − (1.004167)^(−240))
PMT ≈ $3,299.78 / month
Over 20 years that is $791,947 in total payments on a $500,000 starting balance. The $291,947 difference is the interest the balance earned while being drawn down — money you collected on top of your original principal.
Ordinary annuity vs. annuity due
The two annuity types differ in when each payment is made relative to the interest period.
- Ordinary annuity (end of period): The most common convention. Interest accrues first, then the payment is made at the end of the period. This is how mortgages, most pension payouts, and structured settlements work. Because the balance earns a full period of interest before each withdrawal, ordinary annuity payments are slightly higher than annuity-due payments.
- Annuity due (start of period): Payment is made at the beginning of each period, before interest accrues on the remaining balance. Rent, insurance premiums, and some leases are structured this way. Because money is taken out immediately, the remaining balance has less time to compound, so each payment is slightly lower:
PMT_due = PMT_ordinary ÷ (1 + r).
For a 5% monthly rate, the difference between the two types is roughly 0.4% per payment — small, but it adds up to thousands of dollars over a 20-year horizon.
How payment frequency affects your income
Choosing between monthly, quarterly, and annual payments changes both the per-payment amount and the total you collect. The periodic interest rate scales with frequency: a 5% annual rate becomes 0.417% monthly, 1.25% quarterly, and 5% annually.
| Frequency | Periodic rate | Payments | Per payment | Total paid |
|---|---|---|---|---|
| Monthly | 0.417% | 240 | $3,299.78 | $791,947 |
| Quarterly | 1.25% | 80 | $9,915.07 | $793,206 |
| Annual | 5.0% | 20 | $40,121.29 | $802,426 |
Based on $500,000 starting balance, 5% annual rate, 20-year payout. Ordinary annuity.
Annual payments collect slightly more in total ($802,426 vs $791,947 for monthly) because the balance earns interest for a full year before each withdrawal, compounding at a higher per-period rate. Most retirees prefer monthly payments for cash-flow matching, even though the mathematical maximum is achieved with the least-frequent payment schedule.
Payout horizon: how long should your money last?
The payout period is the single biggest driver of your periodic income. The same $500,000 at 5% produces dramatically different monthly payments depending on how many years you need it to last:
| Years | Monthly payment | Total paid | Interest earned |
|---|---|---|---|
| 10 yrs | $5,303.28 | $636,394 | $136,394 |
| 15 yrs | $3,953.97 | $711,715 | $211,715 |
| 20 yrs | $3,299.78 | $791,947 | $291,947 |
| 25 yrs | $2,922.95 | $876,886 | $376,886 |
| 30 yrs | $2,684.11 | $966,279 | $466,279 |
$500,000 starting balance, 5% annual rate, monthly ordinary annuity.
A 10-year payout generates almost twice the monthly income of a 30-year payout, but leaves no money after year 10. Choosing the right horizon requires balancing your income needs against longevity risk — the risk of outliving your money.
How interest rate changes your income
A higher credited interest rate means the balance earns more between payments, sustaining a larger withdrawal. The relationship is not linear — each percentage point of rate improvement delivers diminishing increases in payout. Below are monthly payouts for a $500,000 balance paid over 20 years at various credited rates:
| Annual rate | Monthly payout | Total paid |
|---|---|---|
| 0% | $2,083.33 | $500,000 |
| 2% | $2,529.69 | $607,126 |
| 4% | $3,030.16 | $727,238 |
| 5% | $3,299.78 | $791,947 |
| 6% | $3,582.16 | $859,718 |
| 8% | $4,182.20 | $1,003,728 |
| 10% | $4,825.44 | $1,158,106 |
$500,000 starting balance, 20-year payout, monthly ordinary annuity.
Fixed vs. variable annuities
This calculator models a fixed annuity: both the credited rate and the periodic payment stay constant for the entire payout period. Fixed annuities provide guaranteed income and are used in insurance products, structured settlements, and pension annuitizations.
Variable annuities invest in market sub-accounts, so the credited rate and therefore the sustainable withdrawal — fluctuates with investment returns. This introduces sequence-of-returns risk: a market downturn early in the payout period reduces the balance faster than projected, potentially exhausting the fund before the horizon ends. The fixed-rate model here gives you the guaranteed floor; reality may be higher or lower depending on market performance.
Using this calculator for retirement planning
The annuity payout calculator is a practical tool for several retirement planning decisions:
- Nest-egg sizing. Run the calculation in reverse: decide your target monthly income, then experiment with the starting balance until the payment matches your goal.
- Annuitization analysis. If you are offered a lump-sum vs. annuity choice on a pension, the calculator shows the equivalent annuity payment for your lump sum so you can compare directly.
- Systematic withdrawal planning. IRAs, 401(k)s, and brokerage accounts can be treated as informal annuities. This calculator shows how long a given balance will last at a given withdrawal rate, the same math behind the classic "4% rule".
- Longevity stress-testing. Change the payout period from 20 to 30 years to see how much monthly income you give up for the extra longevity buffer.
The 4% rule and safe withdrawal rates
The 4% rule is a popular retirement planning heuristic: withdraw 4% of your portfolio in year 1 and adjust each subsequent withdrawal for inflation. Research by Bengen (1994) found that a 4% initial withdrawal rate sustained a 30-year retirement across most historical market scenarios.
The fixed-rate annuity model in this calculator differs in one key way: it assumes a constant credited rate (like a fixed annuity contract), whereas the 4% rule relies on portfolio returns that vary year to year. For a quick sanity check, enter your balance, set the rate to 4%, and the years to 30 — the monthly payout will approximate the 4%-rule income, though the actual sustainability depends on inflation and variable investment returns.
Disclaimer
This calculator assumes a fixed credited interest rate throughout the payout period and does not account for inflation, taxes, surrender charges, or annuity contract fees. Actual insurance annuity products include mortality and expense charges that reduce the effective credited rate. Always consult a licensed financial advisor before making annuitization decisions.