Use our Annuity Payout Calculator to estimate how much income you can receive from a lump sum over a set number of years. Whether you are retiring with a nest egg or evaluating a structured settlement, this tool translates your balance, interest rate, and timing preferences into a clear payment amount.
What the Annuity Payout Calculator does
The Annuity Payout Calculator converts a starting balance into level payments over a chosen payout period. It accounts for the nominal annual interest rate, the way interest is compounded, and how often you want to receive money (monthly, quarterly, semiannually, or annually). You can also choose whether payments occur at the end of each period (ordinary annuity) or at the beginning (annuity due). The result is an estimated payment per period, along with totals for the number of payments, total paid out, and total interest earned.
How to use the calculator
- Enter your current annuity balance or lump sum.
- Provide the expected annual interest rate expressed as a percentage.
- Choose your payout length in years.
- Select the compounding frequency used by the account or product (for example, monthly compounding).
- Select how often you want payments (monthly is most common for income planning).
- Choose payment timing: end of period (ordinary annuity) or beginning of period (annuity due).
- Click Calculate to see the estimated payment and summary totals.
Behind the numbers
Two details drive your payout: the effective rate you earn per payment period, and the total number of payments. When compounding differs from your payment schedule, the calculator first converts your nominal annual rate into an effective annual rate and then derives a per-period rate that matches your payment frequency. This ensures apples-to-apples math even if interest compounds daily but you’re paid monthly.
Ordinary annuity vs. annuity due
With an ordinary annuity, payments arrive at the end of each period (like the end of the month). With an annuity due, payments arrive at the beginning of each period. Because funds are withdrawn earlier in an annuity due, there’s less time for the balance to earn interest between payments, which typically results in a slightly lower payment required to fully deplete the balance over the same timeframe.
What the calculator reports
- Payment per period at your selected frequency
- Total number of payments
- Total paid out over the term
- Total interest earned
- The assumed per-period interest rate and effective annual rate for transparency
When to use an annuity payout calculation
This approach is helpful when you have a defined time horizon, like funding retirement from age 65 to 85, or matching income to a mortgage payoff timeline. It’s also valuable when you want level payments and clarity on how long your money will last, rather than variable withdrawals.
Tips for better estimates
- Be conservative with interest rate assumptions, especially for long periods.
- Match compounding frequency to your product’s terms (e.g., monthly for many accounts).
- Choose a payment frequency that fits your budget habits—monthly is easiest for bill alignment.
- Recalculate periodically as rates and balances change.
Limitations and next steps
The Annuity Payout Calculator provides deterministic estimates based on the inputs you supply. It doesn’t account for taxes, fees, inflation adjustments, or market volatility. If you need inflation-indexed income or lifetime guarantees, discuss options with a licensed advisor who can compare fixed, variable, or immediate annuities and explain trade-offs, including surrender charges and insurer ratings.
Example scenario
Suppose you have $300,000, expect a 5% nominal annual rate compounded monthly, and want monthly payments for 20 years at the end of each month. The calculator derives a per-month effective rate from the compounding, counts 240 payments, and computes a level payment that will fully distribute the balance by the end of year 20. You’ll see the monthly amount, total payouts, and total interest, so you can compare scenarios like shorter durations with bigger checks versus longer durations with smaller checks.
Use the Annuity Payout Calculator to bring clarity to your retirement income plan and to compare payout schedules before you commit to a contract.