Annuity Payout Calculator
Work out the income an annuity pays out, for a fixed term or for life.
Inputs
The rate the insurer / account earns during the payout phase.
Payment per Period
$1,817.94
At the selected payment frequency.
Annual Income
$21,815
Monthly Equivalent
$1,817.94
For budgeting comparison regardless of payout frequency.
Total Payout
$436,306
Interest Earned in Payout Phase
$136,306
Payout Rate
7.27%
Annual payment ÷ starting balance.
Payout Period
20years
Step by step
Payout period
= 20 years
Periodic rate (4%/yr ÷ 12 periods/yr)
= 0.3333%
Monthly payment
PMT($300,000, 0.3333%, 240 periods)
= $1,817.94
Total payout over full term
$1,817.94 × 240 payments
= $436,306
Interest earned during payout
$436,306 − $300,000
= $136,306
How it works
When you annuitize, the accumulated value becomes a stream of level payments. The payment formula is the same as a loan amortization in reverse: the issuer 'lends' you a lump sum (your premium) and you receive periodic payments that gradually return both principal and interest. The key variables are the starting balance, the credited rate, and the duration — for a lifetime payout, duration is approximated by your life expectancy.
Formula
Periodic annuity payment
Payment = Balance × rate / (1 − (1 + rate)^−periods)
- PV
- Annuity starting balance
- r
- Periodic interest rate
- n
- Total number of payments
Lifetime payout estimates use life expectancy, not guaranteed durations. Actual annuity quotes from insurers depend on your age, gender, health and prevailing interest rates.
Frequently Asked Questions
What is the difference between fixed-period and lifetime payout?
A fixed-period annuity pays for a guaranteed number of years, after which payments stop regardless of whether you're alive. A lifetime annuity pays as long as you live — the insurer bears the longevity risk, which is why their payouts use actuarial rates that account for expected survival. This calculator approximates lifetime payout by using your life expectancy as the fixed period.
Why is the total payout more than my starting balance?
Because the remaining balance continues earning interest throughout the payout phase. Each payment has two components: return of principal and interest on the outstanding balance. The total interest earned can be significant over a 20–30 year payout.
What payout rate is typical from an insurance company?
Actual quotes from insurers (called 'annuity payout rates' or 'annuity income factors') depend on current interest rates, your age, and whether payments are single or joint life. For context, a common rule of thumb is $500–$700 monthly per $100,000 for a 65-year-old in a typical rate environment.
Should I use monthly or quarterly payments?
Monthly payments give you the most flexibility for budgeting and produce a very similar total as quarterly. The marginal difference is small. Choose the frequency that matches your expense pattern.