See how much income a lump sum can pay. This free annuity calculator estimates your monthly payout, total payout and interest earned from a starting amount over any number of years.
Results update automatically as you type. A fixed-period payout estimate — actual annuity products vary.
How the Annuity Calculator Works
A payout annuity converts a lump sum into a fixed stream of income over a set number of years. This calculator takes your starting amount, an annual interest rate, and a payout period, then works out the level monthly payment that would fully use up the balance (plus interest) by the end of that period — the same math used to amortize a loan, run in reverse.
Formula: M = P × i ÷ [1 − (1 + i)^−n], where i is the monthly rate (annual rate ÷ 12) and n is the total number of monthly payments (payout years × 12). Total payout = M × n, and interest earned = total payout − P.
- P (Starting amount) — the lump sum you’re annuitizing, entered as a dollar principal.
- Annual rate — the yearly interest rate credited to the remaining balance, entered as a percent.
- Payout years — how many years the income stream should last before the balance reaches zero.
- M (Monthly payout) — the level monthly income the calculator solves for.
- Interest earned — the portion of total payments that came from growth rather than your original principal.
Example Scenarios
| Starting Amount | Annual Rate | Payout Years | Monthly Payout |
|---|---|---|---|
| $100,000 | 5% | 20 | ≈$660 |
| $500,000 | 4% | 25 | ≈$2,640 |
| $50,000 | 6% | 10 | ≈$555 |
| $250,000 | 3% | 15 | ≈$1,726 |
| $1,000,000 | 5% | 30 | ≈$5,368 |
Annuity Calculator FAQ
How is the monthly payout amount calculated?
The calculator amortizes your starting amount over the payout period at the rate you enter, the same way a loan payment is calculated in reverse, so the balance plus accrued interest is fully paid out by the end of the term.What’s the difference between a payout annuity and an accumulation annuity?
A payout (immediate) annuity converts a lump sum into income right away, which is what this calculator models. An accumulation (deferred) annuity does the opposite: it grows a lump sum through contributions and interest before payments begin later.What happens if I enter a 0% annual rate?
With a 0% rate, the calculator simply divides the starting amount evenly across the number of payout months, since there’s no interest to layer on top of the principal being drawn down.Will an insurance company’s quote match this exact number?
Not necessarily. This tool models a simple fixed-rate, fixed-period payout. Real annuity contracts add fees, mortality pooling, riders, and other pricing factors that can shift the actual payout higher or lower than this estimate.How does the payout years choice affect the monthly amount?
Spreading the same starting amount over more years lowers each monthly payment but increases the total interest earned across the full payout period, while a shorter period raises the monthly payment and reduces total interest.What does “interest earned” represent in the results?
It’s the difference between everything you’ll receive in total payments and your original starting amount — in other words, the extra income generated by the rate you entered rather than principal you already had.Related Calculators
If you’re weighing a lump-sum payout against other retirement income strategies, you can also project your broader retirement savings timeline, work out required minimum distributions from a retirement account, or see how a balance grows under compound interest before you annuitize it.