Annuity Payout Calculator
Turn a lump sum into a fixed periodic payout over a set term, and see the total income and interest the annuity provides.
How it works
Payment = principal × i ÷ (1 − (1 + i)^−n), where i = rate ÷ payments per year and n = years × payments per year
A fixed-term annuity converts a lump sum into level payments that exhaust the principal exactly at the end of the term, while the unpaid balance keeps earning interest. It is the same amortization math as a loan, run in reverse: you are the lender and the payout is the loan payment. A higher interest rate or a longer term both raise the total dollars paid out.
Worked example
A $250,000 balance at 5% paying monthly for 20 years uses i = 0.05 ÷ 12 and n = 240. The payment is 250,000 × i ÷ (1 − (1 + i)^−240) ≈ $1,650 a month, about $396,000 over the full term — roughly $146,000 of it interest.
Frequently asked questions
Is this a fixed-period or lifetime annuity?
This models a fixed-period (term-certain) annuity that pays for a set number of years and then ends. A lifetime annuity instead pays until death, with the amount set by insurer mortality tables rather than a simple term.
Why is the payout more than the principal?
Because the money you have not yet been paid keeps earning interest during the payout period. Over 20 years that compounding can add tens of percent on top of your original deposit.
What rate should I use?
Use the guaranteed rate the annuity or account credits, not an expected stock-market return — annuity payouts are contractually fixed. A higher rate raises each payment, which is why quotes are sensitive to interest-rate conditions.
Related calculators
Educational estimate, not financial or tax advice. Rules and limits change — confirm current figures with a qualified advisor.