Annuity Payout Calculator – Estimate Retirement Payments
Work out the periodic income an annuity pays from a lump sum.
About the Annuity Payout Calculator
What is the Annuity Payout Calculator?
An annuity payout calculator shows how much income a lump sum generates when it is converted into a series of payments over a set period.
Why use this calculator?
Annuities are used to turn savings into a reliable retirement paycheck. Understanding the payout helps compare an annuity with other income strategies.
How to use it
- Enter the annuity balance.
- Enter the assumed annual return and the payout period.
- Set how often you receive payments.
- See the income per period and the total payout.
Formula
Payment = balance × r / (1 − (1+r)^−n)
This models a fixed period certain annuity. A life annuity bases payments on life expectancy, not a fixed term.
Frequently Asked Questions
How is an annuity payout different from a withdrawal plan?
An annuity payout is calculated to exhaust the balance over the chosen period. A withdrawal plan may preserve principal and pay out indefinitely.
Are annuity payments taxable?
For a qualified (pre-tax) annuity, payments are generally taxed as ordinary income. For a non-qualified annuity, only the earnings portion is taxed.
What is compound interest?
Compound interest is interest earned on both your original money and on previously earned interest. Over time it can make savings grow much faster than simple interest.
What is the difference between nominal and effective return?
The nominal return ignores compounding within the year, while the effective (annualised) return accounts for it. The effective figure is usually higher and better reflects real growth.
How does inflation affect my returns?
Inflation erodes purchasing power. The real return is the nominal return minus inflation, so an investment can grow in dollars yet still lose value in what it can buy.
What rate of return should I assume?
A common long-term assumption for a diversified stock portfolio is about 6% to 8% per year after inflation, but returns vary and are never guaranteed.
Does this account for taxes and fees?
Unless stated, the tool shows pre-tax, pre-fee growth. Subtract your fund expense ratio and expected tax rate to estimate what you keep.
Is this calculator free to use?
Yes. Every calculator on this site is completely free, with no hidden fees, no subscriptions and no limits on how many times you can use it.
How accurate are the results?
We use standard, widely accepted formulas and calculate in your browser using double-precision arithmetic. Results are rounded for readability, so treat them as reliable estimates rather than a guarantee. Real-world factors can vary the true figure.
Can I add this calculator to my own website?
Yes. Open this calculator page and use the "Add to your website" box in the sidebar to copy a ready-made iframe snippet, then paste it into any HTML page.