Annuity Payout Calculator
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Results
$250,000 at 5% pays $1,649.89 a month for 20 years
| Year | Paid out | Interest | Balance at year end |
|---|---|---|---|
| 1 | $19,799 | $12,330 | $242,532 |
| 2 | $19,799 | $11,948 | $234,681 |
| 3 | $19,799 | $11,547 | $226,429 |
| 4 | $19,799 | $11,124 | $217,755 |
| 5 | $19,799 | $10,681 | $208,637 |
| 6 | $19,799 | $10,214 | $199,053 |
| 7 | $19,799 | $9,724 | $188,978 |
| 8 | $19,799 | $9,208 | $178,388 |
| 9 | $19,799 | $8,667 | $167,255 |
| 10 | $19,799 | $8,097 | $155,554 |
The rate is assumed to stay the same. An insurance company’s annuity quote also reflects fees and, for lifetime income, your age and life expectancy, so a quote can differ from this figure.
How to use the annuity payout calculator
- Choose whether to find the payout for a fixed term, or how long a payout you choose would last.
- Enter the starting balance, and either the number of years or the payout you want.
- Choose how often you are paid and whether payouts come at the start or the end of each period.
- Enter the interest rate earned on the money that remains, and its compounding.
Annuity payout formulas
Number of payouts n = −ln(1 − PV × r ÷ (PMT × (1 + r × s))) ÷ ln(1 + r)
PV is the starting balance, r the interest rate per payout period, n the number of payouts and s 1 for payouts at the start of each period (0 at the end). The first formula is the level payment that uses up the balance exactly, the same as a loan payment in reverse. The second solves it for n when you choose the payout PMT. If PMT is no more than the interest the balance earns each period, the logarithm has no solution: the money never runs out.
Worked example
You have $250,000 earning 5% a year, compounded monthly, and want it to pay out over 20 years. The rate per month is 0.05 ÷ 12 ≈ 0.4167%, so the payout at the end of each month is $1,649.89. Over 240 months you receive $395,973, of which $145,973 is interest. Taking the payout at the start of each month lowers it to $1,643.04, because the money has one month less to earn interest.
Turning it around: $1,500 a month would last about 23 years 9 months, and $2,000 a month about 14 years 9 months. Any payout up to $1,041.67 a month, the interest alone, would leave the balance untouched.
Monthly payout per $100,000
Payouts at the end of each month, monthly compounding, nothing left at the end.
| Rate | 10 years | 15 years | 20 years | 25 years | 30 years |
|---|---|---|---|---|---|
| 3% | $965.61 | $690.58 | $554.60 | $474.21 | $421.60 |
| 4% | $1,012.45 | $739.69 | $605.98 | $527.84 | $477.42 |
| 5% | $1,060.66 | $790.79 | $659.96 | $584.59 | $536.82 |
| 6% | $1,110.21 | $843.86 | $716.43 | $644.30 | $599.55 |
| 7% | $1,161.08 | $898.83 | $775.30 | $706.78 | $665.30 |
Scale the figure to your balance: $400,000 is four times the amount shown. Doubling the term from 15 to 30 years at 5% lowers the payout by only 32%, because interest does more of the work over a long term.
Points to keep in mind
- A fixed term is not a lifetime. These payouts stop when the balance reaches zero. A lifetime annuity from an insurer keeps paying however long you live, and its price depends on your age.
- Inflation erodes a level payout. $1,649.89 a month buys less every year. Plan for rising costs in the retirement calculator.
- Rates are assumptions. Savings and bond rates change, and investment returns vary. Try a lower rate to see how sensitive the payout is.
- Building the balance first? The annuity calculator projects the accumulation phase, and the pension calculator compares a lump sum with a monthly pension.
Frequently asked questions
How much does a $250,000 annuity pay per month?
Paid out over 20 years at an assumed 5% compounded monthly, $250,000 gives $1,649.89 at the end of each month. Over 30 years it would be less, and the exact figure from an insurer also depends on fees and, for lifetime income, your age.
How long will my money last?
Choose “How long a payout will last”. $250,000 earning 5% would pay $1,500 a month for about 23 years 9 months, or $2,000 a month for about 14 years 9 months.
Can I take a payout without running out of money?
Yes, if the payout is no more than the interest the balance earns. $250,000 at 5% compounded monthly earns $1,041.67 a month, so any payout up to that would leave the balance intact, assuming the rate holds.
Is it better to be paid at the start or the end of each period?
Being paid at the start gives you the money sooner but slightly less of it, because the balance has less time to earn interest. In the 20-year example the payout is $1,643.04 at the start of each month and $1,649.89 at the end.
Is this the same as a lifetime annuity quote?
No. This calculator pays the balance down over a fixed term at a steady rate. An insurer’s lifetime annuity pools longevity risk, so its payout depends on your age, sex in some markets, the type of contract and fees.