Annuity payout calculator: convert a lump sum into monthly or yearly income over a fixed term, with editable rates. Free, private, no signup required.
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$500k annuity, 5%, 20 years
What this means for your numbers: The worked example returns $802,420 over 20 years, 1.6x the $500,000 principal. At 3% instead of 5%, total interest drops by $133,000: rate shopping is the entire return.
Illustrative breakdown using the worked example above. The calculator computes your own numbers with the same formula.
The formula behind the payout, step by step
The calculator prices a level monthly payout with the standard annuity-immediate payment formula: payment = principal x i / (1 - (1 + i)^-n), where i is the monthly rate (annual rate divided by 12) and n is the number of months. It is the same rearrangement of the present value equation used for mortgages and loan amortization, just in reverse: instead of solving for the balance, you solve for what a fixed principal can sustain.
Worked example with $250,000 at 5.0% for 20 years: i = 0.05 / 12 = 0.0041667 and n = 240 months. Step 1: (1 + i)^-240 = 1.0041667^-240 = 0.368645. Step 2: 1 - 0.368645 = 0.631355. Step 3: 250,000 x 0.0041667 = 1,041.67. Step 4: 1,041.67 / 0.631355 = $1,649.89 per month. Multiply by 240 payments and the total paid out is $395,973, about $145,973 of which is interest the contract earns while the balance drains.
One feature worth noticing: the payout is not principal divided by months. A naive split would give $1,041.67 per month. The formula pays more because every remaining dollar keeps earning the contract rate, and the calculator credits that growth at 5% compounded monthly, not a flat rate.
Where this number will not match a real quote
Insurers quote immediate annuities from mortality tables, not from a fixed-rate formula. A 65-year-old and an 80-year-old buying the same $250,000 life annuity get different monthly checks, because the insurer expects the older buyer's payments to stop sooner. This calculator has no age input, so treat its output as a term-certain payout over the exact years you enter, which is how period-certain annuities and SPIA illustrations are roughly framed.
The rate assumption matters more than most inputs. Move the same $250,000 over 20 years from 4% to 6% and the monthly payout goes from $1,514.95 to $1,791.08, an 18% swing, while actual payout rates on fixed annuities in 2026 have ranged roughly 5.5% to 7% for a 65-year-old single-life contract depending on the insurer and payout option.
Shorter terms change the picture sharply: $250,000 paid out over 10 years at 5% returns $2,651.64 per month, well over the 20-year figure, because principal is returned twice as fast. The calculator also excludes three costs that show up in real contracts: surrender charges (often 7% to 9% in year one, declining over 5 to 8 years), mortality and expense fees inside variable annuities (0.5% to 1.5% annually), and income tax on the earnings portion of each payment for non-qualified money.
