Annuity Payout Calculator

See how much regular monthly income a lump sum can pay out over a set number of years.

Starting balance	$500,000
Yearly return during payout	5 %
Pay out over	25 years

Starting balance

Yearly return during payout

Pay out over

years

Monthly income

$2,922.95

$500,000 pays $2,922.95 a month for 25 years, a total of $876,885, before tax.

Yearly income: $35,075
Total paid out: $876,885
Withdrawal rate (first year): 7.02%

Where your income comes from

Your starting balance57%: $500,000
Growth while paying out43%: $376,885

Balance left

Year 25Balance $0Point at the chart, or Tab to it and use ← →

About the Annuity Payout Calculator

Enter the starting balance, the return it earns during the payout years and how long you want the money to last. The calculator gives the monthly and yearly income, the total paid out and the first-year withdrawal rate.

This is a loan in reverse: the balance earns a return while you draw equal payments until it runs out. It doesn't include insurance-company fees or lifetime guarantees.

The formula

Payment = P × i ÷ (1 − (1 + i)⁻ⁿ)

Worked example

500,000 earning 5% a year, paid out over 25 years

Monthly income: 2,922.95
Yearly: 35,075, a 7.02% first-year withdrawal rate
Total paid out: 876,885

Things to keep in mind

Payments stay the same, so they buy less each year as prices rise.
Before tax.

Questions people ask

What's the 4% rule?

A US guideline that withdrawing 4% in year one, then adjusting for inflation, has historically lasted about 30 years.

Does inflation matter?

Yes; fixed payments buy less each year. Use a lower real return to allow for it.