Annuity Payout Calculator

Enter your lump sum, the rate of return and the term to see how much you can draw each month.

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Results

Monthly payout
$3,299.78
Total per year
$39,597.34
Total paid out
$791,946.89
Of which interest
$291,946.89

Calculated for a fixed-rate, fixed-term annuity paid at the end of each period. Lifetime annuities depend on age and the provider’s tables.

An annuity turns a lump sum into equal payments over a set period — spreading a retirement pot over 20 years, for instance, or drawing an income from a settlement.

Because the money still in the account keeps earning, the total you can draw is more than you put in. The calculator finds the level payment that brings the balance to exactly zero at the end of the term.

How to calculate Annuities

  1. Enter the lump sum.
  2. Enter the expected annual return and how many years the payments should last.
  3. Choose how often you are paid; check the payment and the year-by-year balance.

Annuities formula

  • Payment = principal × i ÷ (1 − (1 + i)⁻ⁿ)
  • i = rate per period, n = total number of payments
  • Total paid out = payment × n

Annuities example

A lump sum of 500,000 at 5% a year pays 3,299.78 a month for 20 years. Over 240 months that is 791,947 in total, of which 291,947 is interest.

Annuities: common questions

Is this the same formula as a loan payment?

Yes, the maths is identical. With a loan the bank gives you a lump sum and you pay it back in equal instalments; with an annuity you hand over a lump sum and receive equal payments.

How are lifetime annuities calculated?

A lifetime annuity has no fixed term, so providers price it from your age and mortality tables. This calculator covers fixed-term annuities only.

What does inflation do to the payout?

The payment is fixed, so its buying power falls over the years. For a real figure, subtract inflation from the rate of return.