Free annuity payout calculator
See the monthly payout a lump sum of principal produces. Enter the principal, an interest rate, and a payout period, and this annuity payout calculator returns the regular income the balance can pay until it is drawn down to zero — updated live, as you type.
On this page12 sections
Estimates only, based on a constant growth and payout rate. Not financial or tax advice.
Results are estimates. Consult a professional.
What is an annuity payout?
An annuity payout is the regular income an annuity pays out — the monthly check a lump sum of principal produces once it is converted into a stream of payments. This annuity payout calculator tells you exactly how big that check is: enter the principal, an interest rate, and the number of years you want the income to last, and it returns the monthly payout instantly.
It focuses on the payout phase — what comes out, not what goes in. During this phase the principal is steadily drawn down: every month the balance earns a little interest, then a fixed payment is taken out, and over the payout period the account is paid down to zero. The size of each payment depends on three things and three things only — the principal, the rate, and the length of the payout period.
The annuity payout formula
The monthly payout is found with the ordinary-annuity payment formula, which solves for the level payment that exactly exhausts the principal over the payout period:
Each payout splits into two parts. Early on, most of it is interest on the large remaining balance; later, as the balance shrinks, most of it is return of principal. The total of all payouts always exceeds the principal, and the gap is the interest the balance earned while it was being paid down.
How the payout period and rate change the check
The two levers you control pull in opposite directions, and understanding them is the point of this tool:
- A longer payout period lowers each check. Spreading the same principal over more months means less principal is returned each month — but the income lasts longer.
- A higher rate raises each check. The unpaid balance earns more while it is being distributed, so more is available to pay out each month.
- The period dominates over long horizons. Doubling the term roughly halves the principal-return portion, while a one-point rate change moves the check far less.
A worked example of an annuity payout
Devon has $300,000 of principal and wants a level monthly payout for 15 years, with the balance earning 5% a year. (The calculator's own defaults are $250,000 at 4% over 20 years, which pays $1,514.95 a month — try them to confirm.)
Step 1 — Find the monthly rate and payout count
Monthly rate = 5% ÷ 12 = 0.0041667. Number of payouts = 15 × 12 = 180.
Step 2 — Solve for the payout
Step 3 — See where the money goes
The drawdown is the defining feature: this is not a 4%-rule withdrawal that aims to leave the principal intact. The payout is engineered so the balance reaches exactly zero on the last payment.
Monthly payout by principal and term (at 4%)
This table holds the rate at 4% and varies the principal and payout period, so you can read the monthly check straight off. All figures are computed by this calculator.
| Principal | 10 years | 20 years | 30 years |
|---|---|---|---|
| $100,000 | $1,012.45 | $605.98 | $477.42 |
| $250,000 | $2,531.13 | $1,514.95 | $1,193.54 |
| $500,000 | $5,062.26 | $3,029.90 | $2,387.08 |
| $750,000 | $7,593.39 | $4,544.85 | $3,580.61 |
| $1,000,000 | $10,124.51 | $6,059.80 | $4,774.15 |
4% annual rate, period-certain payout. Figures computed by this calculator.
Period-certain vs life and joint payout options
This calculator models the period-certain payout because it depends only on a term you choose. Insurance annuities offer other payout structures whose income depends on actuarial life expectancy rather than a fixed number of years:
| Payout option | Income lasts | Longevity risk |
|---|---|---|
| Period certain (this tool) | A fixed number of years you choose | You bear it — income stops at term end |
| Life only | Until you die | Insurer bears it — but nothing left to heirs |
| Life with period certain | Until death, but at least a set minimum | Shared — heirs get the balance of the term |
| Joint and survivor | Until the second of two people dies | Insurer bears it across two lives |
Life-contingent options are priced by insurers using mortality tables; this calculator does not model them.
For the product-specific tools, see the immediate annuity calculator and fixed annuity calculator in the insurance section. FINRA notes that the payout option you choose is one of the biggest decisions in an annuity, because it is usually irrevocable once income begins.
FINRA — Annuities (payout options and what to consider before buying).How annuity payouts are taxed
Tax on each payout depends on how the annuity was funded. With a non-qualified annuity (after-tax money), the IRS uses an exclusion ratio: the return-of-principal portion of each payout is tax-free and only the earnings portion is taxed. With a qualified annuity (pre-tax money inside an IRA or 401(k)), the entire payout is taxable as ordinary income.
- Before 59½: the taxable portion of a payout from a qualified annuity is generally subject to the 10% early-withdrawal penalty on top of income tax.
- Age 73+: qualified annuities are subject to required minimum distributions under SECURE 2.0; scheduled payouts often satisfy the RMD.
What the payout estimate leaves out
- The income ends at the term. A period-certain payout stops when the principal runs out; outliving the term leaves no income.
- No inflation indexing. The payout is level in dollars, so its purchasing power erodes every year.
- No insurer fees. A real annuity quote reflects the insurer's costs and margins, so the actual payout is usually a little lower than this gross figure.
- Rate is fixed for the run. The model assumes one constant rate across the whole payout; a variable annuity's payout would move with its investments.
Use this as a planning estimate. To compare keeping a lump sum versus taking payments, see the pension vs lump sum payout calculator; for the general retirement framing of the same engine, see the annuity calculator.
Frequently asked questions about the free annuity payout calculator
About this annuity payout calculator
This annuity payout calculator runs entirely in your browser — your figures never leave your device. It solves the ordinary-annuity payment formula payout = P × r / (1 − (1 + r)^−n) for the level monthly payout that exhausts the principal over the payout period you choose, recalculating instantly as you type.
Calculators Cloud offers 400+ free tools with no sign-up. The full retirement calculators shelf includes the annuity, pension vs lump sum payout, and retirement income tools. Or browse the full calculator directory.