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Finance · Retirement

Annuity Payout Calculator

Enter a starting lump sum, an assumed annual rate, and a payout period to see the fixed income each payment would provide.

Methodology reviewed Jul 14, 20262 primary sourcesHow it worksInputs stay on this device
Your inputs

Model a payout

The lump sum you are converting to income, from $1 through $1 billion.

Assumed fixed annual rate, from 0% through 30%.

How long payments last, from 1 through 100 years.

Advanced assumptions
Your inputs are calculated locally and are not stored.
Income per payment$3,299.78

A $500,000.00 starting amount pays out this monthly income for 20 years.

Total payout
$791,946.89
Total interest earned
$291,946.89
Starting principal
$500,000.00
Formula & methodology

How the payout is calculated

This is a fixed-rate, immediate-annuity style amortization: the starting lump sum is drawn down to zero over the payout period while the remaining balance keeps earning the assumed rate. It solves the present-value annuity formula for the level payment that exhausts the principal in exactly the number of periods you choose. It is an illustration of that math, not a specific product quote from any insurer.

Payment = Principal × i / (1 − (1 + i)−n)
Principal
Starting lump sum
i
Rate per payment period (annual rate ÷ payments/year)
n
Total number of payments (payments/year × years)

When the rate is 0%, the payment is simply the principal divided by the number of payments.

Worked example

$500,000 at 5%, paid monthly over 20 years

Suppose you convert a $500,000 lump sum at an assumed 5% annual rate into monthly payments over 20 years (240 payments). The income per payment is $3,299.78. Across all 240 payments the total payout is $791,946.89, of which $291,946.89 is interest earned on the declining balance and $500,000.00 is the return of your starting principal.

This is an educational calculation based only on the values you provide. It does not reflect a specific annuity product, insurer pricing, or fees, and it is not financial advice.

Assumptions

What this calculator assumes

  • The annual rate is fixed for the entire payout period and the balance earns it on every remaining dollar.
  • Payments are equal and made at the end of each period until the principal is exhausted.
  • This models a fixed-rate, immediate-annuity style amortization, not a quote for any specific annuity product.
  • No insurer fees, mortality credits, riders, taxes, or inflation adjustments are modeled.
  • Money values are rounded to the nearest cent for display.
Common questions

Annuity payout FAQ

Is this a quote for an annuity I can buy?

No. It illustrates the math of drawing a lump sum down to zero at a fixed rate. Real annuity payouts depend on insurer pricing, your age, product features, and current rates, so an actual quote will differ.

Why is the total payout more than the starting amount?

Because the balance keeps earning interest while it is paid out. The total payout equals your returned principal plus all the interest earned on the declining balance over the period.

Primary sources

Sources and review notes

  1. U.S. Securities and Exchange Commission, Investor.gov — Annuities
  2. Financial Consumer Agency of Canada (canada.ca) — Annuities

Methodology last checked Jul 14, 2026. Formula implementation is covered by deterministic unit tests. No financial professional review is claimed yet.