What Is an Annuity Payout Calculator?
An annuity payout calculator determines the fixed monthly payment a lump sum can provide over a set period while earning interest — commonly used to plan retirement income from an annuity, pension buyout, or structured settlement.
How to Use the Annuity Payout Calculator
- Enter your starting balance (the amount you're annuitizing).
- Enter the expected annual interest rate.
- Enter how many years you want the payout to last.
- View your monthly payout and total payout over the period.
Annuity Payout Formula
This is the same amortization formula used for loan payments, applied in reverse — instead of paying down a loan, the balance pays out to you while any remaining balance continues earning interest.
Worked Example
Monthly payout: approximately $1,320
Total payout over 20 years: approximately $316,800
Total interest earned: approximately $116,800
Understanding Your Results
Monthly Payout is the fixed amount you'd receive each month for the chosen period, fully depleting the balance by the end. Interest Earned shows how much of the total payout comes from investment growth rather than your original principal — a longer payout period or higher rate increases this share.
Fixed-Period vs. Lifetime Annuities
This calculator models a fixed-period payout that fully depletes the balance by a set date — different from a lifetime annuity, which continues paying for as long as the annuitant lives (and factors in life expectancy and insurance pooling, which this calculator doesn't model).
Common Mistakes to Avoid
- Confusing a fixed-period payout with a lifetime annuity, which uses different (actuarial) math.
- Assuming a constant rate of return over the entire payout period, when actual annuity products may credit rates differently.
- Not accounting for fees, which many annuity products charge and which reduce the effective payout.
Frequently Asked Questions
Using the standard amortization formula, treating the starting balance like a loan being paid out to you at a fixed rate over a set number of months.
This calculator models a fixed-period payout that ends after a set number of years. Lifetime annuities pay for as long as the annuitant lives and use actuarial (life expectancy) calculations instead.
Yes — spreading the same starting balance over more years reduces the monthly payment amount, though total interest earned over the longer period may increase.
Use the rate specified by your actual annuity contract, or a conservative estimate if you're comparing hypothetical scenarios — actual annuity products often have specific contractual rates.
In many cases, yes, at least partially — tax treatment varies by annuity type and jurisdiction, so consult a tax professional for your specific situation.