Annuity Payout Calculator
Turn a lump sum into a paycheck. Estimate the level monthly income a period-certain annuity could provide and its effective payout rate.
Example: with Premium / principal $250,000 · Assumed interest rate 5% · Payout period 20 yrs → Monthly income: $1,649.89.
- Annual income$19,799
- Total paid out$395,973
- Effective payout rate7.9% / yr
Computed by the calculator below using its default values. Change any input to see your own numbers.
Accumulation phase: grow an annuity balance
Building toward an annuity? Estimate how a starting principal plus regular additions grows before you annuitize.
Accumulation schedule
Year-by-year balance growth from additions and compounding.
Compare immediate-annuity quotes
Learn moreTrading a lump sum for income
An annuity converts savings into guaranteed income. A period-certain annuity pays a level amount for a fixed number of years; a lifetime annuity pays as long as you live, with the amount set by your age and current rates. The trade-off is liquidity — the lump sum is gone.
How it’s calculated & sources
We treat the premium like a loan the insurer “repays” to you: monthly income amortizes the principal over the payout period at the assumed rate. The payout rate is annual income ÷ premium.
Accumulation phase: end balance = P×(1+r)^n + PMT×(((1+r)^n−1)÷r)×(timing is “beginning of period” ? (1+r) : 1), where P is starting principal, PMT is the monthly addition, r is the monthly rate (annual growth rate ÷ 12), and n is the number of months. Choosing “beginning of period” (annuity due) gives every addition one extra period of growth versus “end of period” (ordinary/immediate annuity), which is the standard assumption used by most annuity and retirement calculators. This models the savings/contribution stage — once you stop contributing and start drawing income, that’s the payout phase (above), a separate calculation.
Benchmark: current immediate-annuity payout rates run roughly 6–7% for many ages and terms (LIMRA, 2025).
Results update as you type and are general estimates, not personalized financial, tax, medical or legal advice. Verify with a professional.
Frequently asked questions
Is the payout rate the same as interest earned?
No — the payout includes return of your own principal, so it looks higher than the interest rate. Don’t confuse the two.
Period-certain or lifetime?
Lifetime annuities protect against outliving your money but stop at death (unless you add a guarantee). Period-certain pays a set term to you or your heirs.
What is the difference between accumulation and payout?
Accumulation is the saving stage: a starting principal plus regular additions grows tax-deferred until you’re ready to annuitize. Payout (distribution) is what happens after — the balance is converted into a stream of income, either for a fixed period or for life. Use the accumulation section above to project a balance, then the payout calculator below (or the dedicated Annuity Payout Calculator) to see what income it could generate.
What does “beginning” vs “end of period” mean for contributions?
It is when each addition is assumed to hit the account relative to that period’s compounding. “End of period” (ordinary annuity) is the standard assumption — a contribution made at the end of the month has not yet earned that month’s growth. “Beginning of period” (annuity due) assumes the contribution arrives first and earns a full extra period of growth, so it produces a slightly higher end balance for the same inputs.