Annuity Payout Calculator
Find out exactly how much a fixed-length annuity pays per period, or how long a chosen payment amount will actually last — plus a full year-by-year chart showing your balance depleting and how much of each payment is interest versus principal.
A $100,000 annuity at a 5% annual rate paid monthly over 10 years pays about $1,055.24 per month. The formula: payout = balance × r ÷ (1 − (1+r)⁻ⁿ), where r is the effective periodic rate and n is the total number of payments — not a simple annual rate ÷ 12.
What an annuity payout actually calculates
Once an annuity moves from its accumulation phase into its payout (or distribution) phase, a lump-sum balance gets converted into a stream of regular payments. This calculator handles the two most common ways that conversion works: choosing how long you want payments to last and finding the payment amount that exactly depletes the balance over that period (fixed length), or choosing the payment amount you want and finding out how long the balance can sustain it (fixed payment).
Both approaches carry the same underlying tension. Pick too short a payout period or too large a payment, and you risk outliving your money. Pick too long a period or too small a payment, and you may have been overly conservative with funds you could have used sooner. There's no universally "right" answer — it depends entirely on your other income sources, life expectancy, and risk tolerance.
The payout formula, and why "rate ÷ 12" gives the wrong answer
Payment = Balance × r ÷ (1 − (1 + r)⁻ⁿ)
Here, r is the effective periodic rate and n is the total number of payments (years × payments per year). The part that trips people up is r: annuity rates are typically quoted as an annual rate that compounds annually, even when payouts happen monthly. Getting the monthly rate right means finding the effective monthly rate — the rate that, compounded 12 times, reproduces the same annual growth — using r = (1 + annual rate)^(1/periods per year) − 1, rather than simply dividing the annual rate by 12. This is exactly why a rough hand calculation using annual rate ÷ 12 comes out slightly different from the precise number.
For an annuity due (payments at the start of each period instead of the end), the formula's result is divided by (1 + r), since money withdrawn slightly earlier has slightly less time to have earned that period's interest first.
Worked examples
$100,000, 5%, 10 years, monthly, ordinary
Payout ≈ $1,055.24/month. Total paid over 10 years: about $126,629 — meaning roughly $26,629 came from interest earned along the way.
$500,000, 6%, 10 years, monthly, ordinary
Payout ≈ $5,511.20/month. Total paid: about $661,344, of which roughly $161,344 is interest earned during the payout period.
$250,000, 4%, monthly payment of $1,500
Fixed-payment mode: a $1,500 monthly withdrawal from a $250,000 balance at 4% lasts approximately 16.4 years before depleting to zero.
Same $100,000 example, but Annuity Due
Switching to payments at the start of each period lowers the monthly payout slightly to about $1,050.86/month — the small difference reflects one period's less interest accrual before each withdrawal.
When an annuity payout isn't the right tool for a cash need
An annuity payout is built for steady, planned income over years, not a quick source of cash. If you need money right now rather than a structured payout stream, it's worth comparing against faster (if less favorable) options. Our pawn value calculator estimates what a physical asset might fetch as immediate collateral-based cash — useful context for seeing just how different an instant lump sum looks compared to a steady annuity income stream over years.
On the other end of the spectrum, some income sources are more one-off than either option — turning an existing employee benefit into cash rather than either borrowing against an asset or annuitizing a balance. Our selling leave days calculator covers exactly that kind of one-time cash conversion, which is worth weighing alongside a longer-term annuity payout plan when you're mapping out several different income and cash-flow options at once.
Annuity payout calculator — FAQ
How much does a $100,000 annuity pay per month?
At a 5% annual rate paid out over 10 years, a $100,000 annuity pays approximately $1,055 per month under the fixed-length payout option. The exact figure depends heavily on three things: the rate, how many years you spread the payout over, and whether payments happen at the start or end of each period. A shorter payout period produces a larger monthly payment since the same balance is divided across fewer withdrawals; a longer period produces a smaller monthly payment.
What's the difference between fixed length and fixed payment annuity payouts?
A fixed-length payout lets you choose how many years the payments last, and the calculator determines the payment amount that exactly depletes the balance over that period. A fixed-payment payout works in reverse — you choose the payment amount you want to receive, and the calculator determines how long that amount can be sustained before the balance runs out. Both options carry the same underlying risk: pick a payout period or payment amount that doesn't match your actual needs, and you either run out of money too early or leave the payments smaller than they needed to be.
Why doesn't my payout match a simple rate-divided-by-12 calculation?
Because annuity rates are typically quoted as an annual rate that compounds annually, even when payments happen monthly. Converting that annual rate into an accurate monthly rate requires finding the effective monthly rate — the rate that, compounded 12 times, produces the same annual growth — rather than simply dividing the annual rate by 12. This effective-rate conversion is the same convention used by major annuity calculators, and it's the reason a rough back-of-envelope estimate using annual rate ÷ 12 will come out slightly different from the precise figure.
What's the difference between an ordinary annuity and an annuity due?
In an ordinary annuity, payments happen at the end of each period — the more common structure for most payout annuities. In an annuity due, payments happen at the beginning of each period instead. Because money received earlier has more time to earn interest (or, from the payout side, is withdrawn before that period's interest accrues), an annuity due produces a slightly smaller regular payment than an ordinary annuity for the exact same balance, rate, and payout length, since the balance has slightly less time to grow between withdrawals.
What happens if I choose a fixed payment amount that's too small or too large?
If your chosen payment is too small — specifically, smaller than the interest the balance earns each period — the annuity never depletes and payments could theoretically continue indefinitely, since the balance keeps growing faster than you're withdrawing from it. If the payment is too large, the balance depletes faster than you may have planned for, potentially leaving you without income sooner than expected. This calculator will flag the first case directly, since a payment that never depletes the balance can't produce a meaningful "how long will this last" answer.
Are annuity payouts taxed?
It depends on whether the annuity is qualified or non-qualified. A qualified annuity (funded through a tax-advantaged account like an IRA or 401(k)) was typically purchased with pre-tax money, so the full amount of each payout is generally taxed as ordinary income. A non-qualified annuity was purchased with after-tax money, so only the earnings portion of each payment is taxed, with withdrawals generally treated as earnings-first under IRS rules. Tax treatment varies by jurisdiction and individual circumstances, so it's worth confirming your specific situation with a tax professional.
What other annuity payout options exist besides fixed length and fixed payment?
A lump sum lets you withdraw the entire balance in a single payment, though this can trigger a significant tax bill in the year it's received. A life-only annuity pays for as long as you live, with the amount based on life expectancy calculations, but stops entirely at death regardless of remaining balance. A joint and survivor annuity extends life-only payments to a second person (commonly a spouse) after the first annuitant dies. A life with period-certain annuity combines lifetime payments with a guaranteed minimum payout period for a beneficiary if death occurs early. This calculator focuses specifically on fixed length and fixed payment, the two most straightforward and most commonly modeled options.
Does a higher interest rate always mean a higher monthly payout?
For a fixed-length payout, yes — a higher rate means the balance earns more between withdrawals, which supports a larger regular payment over the same payout period. For a fixed-payment scenario, the relationship flips: a higher rate means your chosen payment amount is easier for the balance to sustain, so the money lasts longer rather than paying out more per period. Which direction matters more depends on which variable you're solving for.
This calculator is for educational purposes only. It is not financial advice. Always consult a qualified financial advisor before making financial decisions.
