How to use the annuity payout calculator
First pick your question. Solve mode finds the payment a balance supports for a set number of years. Test mode takes a payment you have in mind and shows how long the balance lasts.
Use the amount you can draw on, after any surrender charges. The return is a yearly effective rate you choose, not a contract guarantee.
- Choose solve payment or test how long a payment lasts.
- Enter the starting balance and, in solve mode, the payout period in years.
- Pick monthly, quarterly, semiannual or annual payments, and whether they come at the start or end of each period.
- Enter the yearly return, any yearly percentage fee and an optional yearly payment increase.
- Add an ending balance to keep, an inflation rate, and a taxable share and tax rate if you want an after-tax estimate.
- Read the payment or duration, total payouts, earnings and the lower-return stress result.
Annuity payment formula
For level payments with nothing left at the end, the payment is the balance times i / (1 - (1 + i)^-n). Here i is the return per payment period and n is the number of payments. The calculator converts the yearly return to a monthly rate with a 12th root, so 4% a year becomes about 0.3274% a month.
If you keep an ending balance, its present value is set aside first. Rising payments use a growing annuity version of the formula, and start-of-period payments divide by an extra (1 + i).
Rate per period: i = ((1 + annual return) x (1 - annual fee))^(1 / payments per year) - 1Level payment = balance x i / (1 - (1 + i)^-n)Balance available for payments = starting balance - ending balance / (1 + i)^nGrowing payment factor = [1 - ((1 + g) / (1 + i))^n] / (i - g), where g is payment growth per periodEstimated tax = payment x taxable share x tax rate
Example: $250,000 paid out over 20 years
Take $250,000, a 4% yearly return, no fee, level monthly payments at the end of each month and nothing left over. The payment is about $1,505.55. Over 240 payments you'd receive $361,331.25, so $111,331.25 comes from earnings.
Say 75% of each payment is taxable at 20%. That's $225.83 of tax on the first payment, leaving $1,279.71. Those are your own estimates, not a tax ruling.
| Payout period | Monthly payment | Total paid out | Earnings |
|---|---|---|---|
| 10 years | $2,522.64 | $302,716.85 | $52,716.85 |
| 15 years | $1,840.27 | $331,249.23 | $81,249.23 |
| 20 years | $1,505.55 | $361,331.25 | $111,331.25 |
| 25 years | $1,309.74 | $392,922.20 | $142,922.20 |
| 30 years | $1,183.25 | $425,971.57 | $175,971.57 |
How long will my annuity last?
Test mode runs your payment month by month until the balance runs out. With $250,000 at 4%, a $1,500 monthly payment lasts 20 years and 2 months. A $2,000 payment lasts 13 years and 6 months.
The stress check lowers the return by the points you choose and reruns the plan. At 2% instead of 4%, the $1,500 payment lasts 16 years and 4 months, and the $2,000 payment lasts 11 years and 9 months.
Annuity income with fees, raises and timing
Each choice changes the starting payment from the same $250,000 over 20 years. A rising payment starts lower because later checks are bigger. Payments at the start of each month leave less money earning, so they start a little lower too.
Inflation is a separate field. It doesn't change the payment. It shows what the last payment buys at today's prices. With level payments and 2% inflation, the final $1,505.55 buys about what $1,014.86 buys today.
| Scenario | First monthly payment | First-year income |
|---|---|---|
| Level, end of month, no fee | $1,505.55 | $18,066.56 |
| Level, start of month | $1,500.63 | $18,007.61 |
| 1% yearly fee | $1,376.58 | $16,518.92 |
| Rising 2% a year | $1,260.09 | $15,121.12 |
| Return drops to 2% | $1,262.57 | $15,150.84 |
Is this an immediate annuity calculator?
Not exactly. An immediate annuity from an insurer turns your premium into income that usually starts within a year. For a lifetime payout, the insurer prices it using your age, life expectancy, survivor options and its own rates. This calculator doesn't know any of those.
What it does is the fixed-period math: how much a balance can pay over a set number of years at a return you choose. That's useful for checking an illustration or planning your own withdrawals. FINRA notes that turning a contract into lifetime income is generally irrevocable, so get the insurer's quote before you decide.
Limits to check before you rely on a number
The model uses a smooth return. Real investments move around, and a drop early in the payout years can shorten how long the money lasts. It also leaves out surrender charges, rider fees, caps, market value adjustments, mortality credits and required minimum distributions.
The tax result only applies the share and rate you enter. IRS Topic 410 explains that annuity payments can be fully or partly taxable depending on what you paid in with after-tax money. Check your contract, your 1099-R and current IRS guidance for the real figure.
Sources
These public references support the payout types, annuitization warnings, fees and tax rules discussed on this page.