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Annuity Payout Calculator
How long will the money last once the checks begin? This annuity payout calculator works the distribution phase both ways: set a term to find the level payout, or set a monthly payout to find the years it covers.
See how this works on a $500,000 retirement pot — 3 real examples
Monthly payout
$0
Payout per period
—
Number of payments
—
Total payout
$0
Total interest
$0
Balance drawdown over time
Still building the balance? Use the Annuity Calculator for the accumulation phase, then bring the ending balance here to plan the payout — end-to-end retirement income in two steps.
Period-by-period depletion schedulePayout, interest and balance each period
| # | Start balance | Payout | Interest | End balance |
|---|
How your annuity payout is calculated
Both modes use the same annuity relationship between a lump sum, a level payment and a term — just rearranged for whichever value is unknown:
Fixed length: PMT = PV · r / (1 − (1 + r)−n)
Fixed payment: n = −log(1 − PV·r / PMT) / log(1 + r)
r = annual rate / periods per year PV = principal n = number of payouts
In Fixed length mode the calculator solves the level payout PMT that draws the principal down to exactly zero over n payments (years × payouts per year), so the total paid out is PMT × n and total interest is that total minus the principal. In Fixed payment mode it inverts the same formula to find the number of payouts n a fixed payment lasts — a fractional final period is normal, since the last payout is usually partial. A start-of-period (annuity-due) payout is slightly larger for a fixed term because less balance is left earning interest.
There is one honest edge case: in Fixed payment mode, if the payout is at or below the interest the balance earns each period (PV × r), the balance never falls and the payout is a perpetuity — funded entirely by interest. Rather than show an impossible or infinite timeline, the calculator flags this and reports the interest earned that period so you can raise the payout above it. These figures assume a constant return for the whole payout and add no fees or taxes — treat them as a planning estimate, not a guaranteed quote.
One $500,000 pot, three ways to drain it
The same $500,000 earning 5%, paid out monthly — on a 20-year schedule, at a chosen $3,000 check, and at a rate the pot outlasts.
The set term: emptied in 20 years
per month$3,299.78
- The solver finds the level check that lands the balance on exactly zero at payment 240.
- Interest keeps working the whole way down, adding $291,947 to the $500,000 in.
- Total collected: $791,947 — the pot pays out more than half again what went in.
A fixed horizon hands the solving to the calculator; the price is a hard stop at year 20.
Load this example (opens in a new tab)The chosen check: $3,000 a month
until the money runs out23 yrs 9 mo
- Trimming the check $299.78 below the solved payout buys three years and nine months more income.
- It takes 286 checks to empty the pot, and the last one is partial: $427.00.
- Total income reaches $855,426 — $63,479 more than the 20-year schedule collects.
Naming the payment means nobody promises a tidy end date — here it lands past year 23.
Load this example (opens in a new tab)The perpetuity: $2,000 never runs out
at $2,000 a monthNever runs out
- The balance earns $2,083.33 of interest a month — more than the payout removes.
- Every check is covered by interest alone, so the $500,000 itself never shrinks.
- The gap between check and floor, $83.33 a month, is the whole margin of forever.
Below the interest floor a drawdown quietly becomes a perpetuity — income without an end date.
Load this example (opens in a new tab)Illustrations only, not financial advice. Your own rate, taxes and insurance will differ — check with a qualified financial advisor before acting on any of this.
Turning a lump sum into income, in plain English
- Two questions, one tool. Use Fixed length when you know how many years the money should last; use Fixed payment when you know the monthly annuity payout you need and want to see how long it holds out.
- Interest stretches every payout. The remaining balance keeps earning while you draw it down, so a higher return means a larger payout for the same term — the payout is always more than principal ÷ number of payments.
- Watch the interest floor. A payout at or below the interest the balance earns never depletes it. That can be a feature (living off interest) or a surprise, so the calculator calls it out.
- Frequency barely moves the total. Monthly, quarterly and annual payouts land close in total value; pick the cadence that matches how you actually want to receive income.
- This is the math, not the contract. Life-only and joint-and-survivor annuities are priced on life expectancy by an insurer — use this for a fixed-term drawdown or to sanity-check a quote.
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Frequently asked questions
How are annuity payouts calculated?
This annuity payout calculator uses the standard annuity formula, PMT = PV × r ÷ (1 − (1 + r)⁻ⁿ), where PV is your starting principal, r is the per-period interest rate and n is the number of payments. For example, $500,000 earning 5% paid out monthly over 20 years yields about $3,300 a month — roughly $792,000 in total, of which about $292,000 is interest earned on the balance while it draws down.
Fixed length vs fixed payment — which payout should I choose?
In Fixed length mode you pick how many years the money should last and the calculator solves the level payout that exhausts the principal exactly on schedule. In Fixed payment mode you pick the payment you want and it solves how long the balance lasts. Choose fixed length when you have a target horizon (say, 20 or 30 years); choose fixed payment when you know the income you need each period and want to see how long it holds out.
How long will my annuity last?
Switch to Fixed payment mode, enter your balance, return rate and the amount you want to withdraw each period. Paying $3,000 a month from a $500,000 balance earning 5% lasts about 24 years. The larger the payment relative to the interest the balance earns, the faster it depletes — and if the payment is at or below the interest earned, the balance never runs out at all.
How does the interest rate affect my payout amount?
A higher return lets the remaining balance keep working while you draw it down, so each payout is larger for the same term. On a $500,000 principal paid over 20 years, raising the assumed return from 3% to 6% lifts the monthly payout from roughly $2,770 to about $3,580. Because future markets are uncertain, use a conservative, realistic rate rather than an optimistic one.
What happens if the payment I choose is too small to ever run out?
If your chosen payment is at or below the interest the balance earns each period, the principal never depletes — the payout is funded entirely by interest, like a perpetuity. Instead of showing an impossible timeline, this immediate annuity calculator flags that case and tells you the interest earned that period, so you can raise the payment above it if you actually want the balance to draw down.
What payout options exist beyond fixed length and fixed payment?
Real annuity contracts also offer life-only payouts (income for as long as you live), joint-and-survivor payouts (continuing to a spouse), and life-with-period-certain options. Those are actuarial products priced on life expectancy and an insurer’s assumptions. This tool models the two purely mathematical options — a set number of years or a set payment — which is the right lens for a self-managed drawdown or for sanity-checking a quote.
Are annuity payouts taxable?
It depends on how the annuity was funded. Payouts from a qualified (pre-tax) account are generally taxed as ordinary income, while payouts from a non-qualified annuity are usually part return-of-principal (untaxed) and part taxable earnings. This calculator shows the gross payout only and applies no tax; check your contract or a tax professional for your after-tax figure.
Disclaimer: these calculators are educational tools, not financial advice. They model your inputs with published formulas, but they cannot know your full situation — for decisions with real stakes, talk to a qualified professional. Formulas and defaults last reviewed .