Annuity Payout Calculator
Calculate the fixed payment an annuity can pay you each period until the balance reaches zero.
Reviewed by the CalcCafe editorial team · Last updated 1 July 2026 · How we test our tools
Example
Start with a $100,000 principal earning 5% annually, paid monthly over 20 years (240 payments). The periodic rate is r = 0.05 / 12 = 0.0041667.
M = 100,000 × 0.0041667 / (1 − 1.0041667−240) = $659.96 per month. Over 240 payments that totals $158,389.38, of which $58,389.38 is interest earned while the balance draws down to $0.
How it works
Enter your starting principal, annual interest rate, payout length in years, and how often you take payments. The tool solves M = P·r/(1−(1+r)^−n) so the balance hits exactly zero at the end.
Good to know
The Annuity Payout Calculator answers one focused question: if you have a lump sum today and want it to pay you a steady amount until it runs out, how big can each payment be? You enter a starting principal, an assumed annual interest rate, how many years you want the payments to last, and how often you receive them (monthly, quarterly, or yearly). It then returns the fixed payment that drains the balance to exactly zero on the final payout date, along with the total number of payments, the total amount paid out, and how much of that came from interest earned along the way.
It is built for someone modeling a self-funded income stream, such as drawing down a retirement account, structuring a settlement payout, or sanity-checking a quote before talking to an advisor. Because it runs entirely in your browser, you can test scenarios freely without sharing any financial figures. Use it when you want to compare trade-offs quickly: a longer payout length lowers each payment but stretches income further, a higher assumed rate raises each payment, and switching from monthly to yearly changes both the payment size and how interest accrues between payouts.
To read the result, focus on the "Payout per period" headline alongside the principal-versus-interest bars. The interest figure shows how much the remaining balance keeps earning while you draw it down, which is why total paid out exceeds your starting principal. A useful way to gauge how much of your income is "your own money" versus growth is to compare the two bars directly.
- The model assumes a fixed rate, level payments at the end of each period, and a balance that depletes to exactly $0.
- It does not account for taxes, product fees, inflation eroding purchasing power, or variable returns that real markets produce.
One practical caveat: the interest rate you enter is an assumption, not a guarantee. Run the numbers with a conservative rate as well as your hoped-for rate, because a balance funded by market returns can deplete faster than planned if actual returns fall short or arrive in a bad sequence early on.
Frequently asked questions
What happens if I set the interest rate to 0%?
With a 0% rate the payout is simply the principal divided by the number of payments. For example, $100,000 over 20 years monthly (240 payments) pays $416.67 each period, since no interest is earned.
Does this assume payments at the start or end of each period?
It uses an ordinary annuity, meaning payments occur at the end of each period. Payments made at the beginning (an annuity-due) would be slightly smaller because each payment has an extra period to earn interest.
Is my data uploaded anywhere?
No — this calculator runs entirely in your browser; nothing is uploaded.
Is this financial advice?
No. These are educational estimates — consult a qualified financial professional before making decisions.
People also ask
How is an annuity payout amount calculated?
The fixed payment is found with the annuity formula M = P·r/(1−(1+r)^−n), where P is the principal, r is the rate per period, and n is the total number of payments. This solves for the level payment that reduces the balance to exactly zero on the final date.
Can I increase my monthly payout without adding more money?
Yes, in the model you can raise the per-period payout by shortening the payout length or assuming a higher interest rate, but both have trade-offs. A shorter term means income stops sooner, and a higher assumed rate is only an estimate that may not be achieved in reality.
Why does the total paid out exceed my starting principal?
Because the remaining balance keeps earning interest while it is being drawn down, the sum of all payments is larger than the original principal. The difference is the total interest earned, shown separately in the results.
What is the difference between an annuity payout and an annuity accumulation calculation?
A payout calculation determines how much income a fixed lump sum can pay out over time until it is depleted. An accumulation calculation works in the opposite direction, estimating how a balance grows from contributions and interest before any payouts begin.
Does a higher payout frequency give me more total money?
Not necessarily; changing frequency mainly changes the size and timing of each payment rather than dramatically changing total value. More frequent payouts mean smaller individual payments, and the exact totals shift slightly because of how interest compounds between periods.
How does inflation affect a fixed annuity payout?
This calculator produces a level payment that stays the same in dollar terms for the whole period, so it does not adjust for inflation. Over many years, a fixed payment buys less as prices rise, which is why some people compare it against an inflation-adjusted income target.
What happens to the balance after the last payout?
The model is designed so the balance reaches exactly zero after the final payment, leaving nothing remaining. Real annuity products may differ, since some include death benefits, guaranteed periods, or residual values.
How much will a $100,000 annuity pay per month?
Using this calculator's example, $100,000 earning 5% and paid monthly over 20 years supports $659.96 a month, calculated as 100,000 × 0.0041667 ÷ (1 − 1.0041667^−240). Over 240 payments that totals $158,389.38, with $58,389.38 coming from interest. An insurer's lifetime annuity quote will differ because it is based on your age and current rates.
What is the best age to buy an annuity?
There is no single best age; it depends on when you need guaranteed income and how long you expect to live. Immediate lifetime annuities pay more per dollar the older you are at purchase because the insurer expects fewer payments, which is why many buyers wait until their 60s or 70s. Deferred annuities are often bought earlier to build value before payouts begin; this is general information, not advice.
How much will a $300,000 annuity pay out per month?
At 5% paid monthly over 20 years, $300,000 supports about $1,979.87 a month, three times the $659.96 that $100,000 pays under the same assumptions. Over 240 payments that comes to about $475,168, including roughly $175,168 of interest. A shorter payout period or higher rate raises the payment; actual insurer quotes vary.
How much tax will I pay if I cash out my annuity?
Earnings withdrawn from an annuity are taxed as ordinary income at your marginal rate, and if the annuity was funded with pre-tax money (such as inside an IRA) the entire withdrawal is taxable. Withdrawals of taxable earnings before age 59½ generally also face a 10% federal early-withdrawal penalty, and the insurer may charge surrender fees on top. The exact amount depends on your bracket and contract, so this is general information, not tax advice.
Is it smart to cash out an annuity?
Cashing out usually triggers ordinary income tax on the gains, a possible 10% penalty before 59½, and surrender charges from the insurer, so a large chunk of the value can disappear. It can still make sense when you need the money urgently, the annuity's fees or returns are poor, or a better product is available through a tax-free 1035 exchange. Comparing the net after-tax amount with the guaranteed income stream this calculator shows is the right starting point; this is general information, not advice.
How to avoid federal tax on annuity withdrawal?
You generally cannot avoid tax on annuity earnings, but you can reduce or delay it: take withdrawals as a stream of payments over years so each falls in a lower bracket, wait until after 59½ to avoid the 10% penalty, or move to another annuity through a 1035 exchange without a taxable event. Withdrawals from a non-qualified annuity return your original after-tax contributions tax-free once the earnings have been paid out. Rules and thresholds change, so this is general information, not tax advice.
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Sources & references
These tools follow our methodology and provide educational estimates only — verify important figures with a qualified professional.