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Annuity Payout Calculator

Updated · By the CalculatorDash editorial team · How we check our maths

Quick answer

A lump sum paid out over a fixed period works like a mortgage in reverse. $500,000 earning 5% a year and paid out monthly over 25 years supports about $2,923 a month. Total payments come to roughly $877,000.

Income from a lump sum

$
%
years
$

Monthly payout

$2,923

Yearly payout
$35,075
Total paid out
$876,885
How long your wanted income lasts
18.1 years

100 means the interest alone covers it.

Shows a fixed-period payout from invested savings. Insurance-company life annuities price payouts using age and life expectancy, so quotes will differ.

How this calculator works

If you invest a lump sum and draw the same amount every month until it reaches zero, the maths is the same as a loan: the lump sum is the 'loan', the return is the 'interest rate', and the withdrawal is the 'payment'. This calculator uses that formula to show the income a sum can support over a period you choose.

It also answers the reverse question. Enter the monthly income you'd like and it tells you how long the money lasts at that rate. If the return alone covers the withdrawal, the money lasts indefinitely.

A lifetime annuity bought from an insurer is different: it pays for as long as you live, and the payout depends on your age, sex in some markets, and current interest rates. Use this as a benchmark against those quotes.

The formula

Monthly payout
lump sum × r ÷ (1 − (1 + r)^−n), r = return ÷ 12, n = months
How long it lasts
−ln(1 − r × lump sum ÷ withdrawal) ÷ ln(1 + r) months

Worked example

$500,000 at 5% over 25 years supports about $2,923 a month, or $35,076 a year, for a total of roughly $877,000. Drawing $3,500 a month instead would last about 18.1 years.

Tips

  1. 01Use a conservative return; an income plan that fails at 80 is worse than one that is too cautious.
  2. 02Inflation erodes fixed payouts. Consider increasing the amount slowly or keeping part of the money invested for growth.
  3. 03Compare quotes from several insurers if you are considering a lifetime annuity.

Frequently asked questions

How much does a $100,000 annuity pay per month?

As a 20-year fixed-period payout at 5%, about $660 a month. Lifetime annuity quotes depend on age and rates.

Is an annuity a good idea?

It can be for people who want guaranteed income and fear outliving their savings, but fees and loss of flexibility matter. Compare carefully.

What is the difference between a fixed-period and lifetime payout?

A fixed-period payout ends after a set number of years. A lifetime annuity pays for as long as you live.