About this Annuity Payout
An annuity is a financial product that pays out a fixed stream of payments. If you have a lump sum (like a 401k or lottery win), this tool shows how much monthly income it can generate over a specific number of years.
How to use this calculator
- Enter your Starting Balance (Principal).
- Enter the estimated Annual Return on the remaining balance.
- Set the Payout Duration in years.
- The tool calculates the fixed Monthly Income that depletes the account exactly at the end of the term.
Accuracy and testing
Review formula sources, default test cases, assumptions, unit handling, rounding rules, and changelog for this calculator.
How this calculator works
Inputs explained
Starting Balance
The lump sum available to fund the annuity.
Payout Duration
How many years you want the income to last (e.g., 20 or 30 years for retirement).
Understanding your results
Example scenarios
Retirement Nest Egg
$500,000 at 6% for 20 years provides ~$3,580/mo. Total payout is ~$860k (you earned $360k in interest).
Safe Withdrawal
With 0% return, $500,000 over 20 years is just ~$2,083/mo.
Key Features
- Fixed Period Payout
- Interest vs Principal Breakdown
- Monthly Income Estimator
Things to Keep in Mind
Assumes a constant rate of return and fixed withdrawal amount. Inflation is not accounted for (buying power will decrease over time).
Tips & Best Practices
- A higher interest rate drastically increases your monthly payout because the money grows while you wait to withdraw it.
- Consider the '4% Rule' for indefinite withdrawals (preserving principal) vs an annuity (depleting principal).
Glossary of Terms
- Immediate Annuity
- An annuity that starts paying out income right away.
- Principal
- The original lump sum invested.
- Depletion
- The process of spending down the account balance to zero.