Annuity Payout Calculator
See the income a lump sum can pay, or how much you need for the income you want
What do you want to know?
To keep up with inflation, e.g. 2.5%
Income per month
$2,890.69
$500,000 paying out for 25 years
First month's payment
$2,890.69
Final payment
$2,890.69
the same every period
Total paid out
$867,207
Paid by investment growth
$367,207
42% of all income
Year-by-Year Payout
| Year | Income Paid | From Growth | From Balance | Balance at Year End |
|---|---|---|---|---|
| 1 | $34,688 | $24,212 | $10,476 | $489,524 |
| 2 | $34,688 | $23,688 | $11,000 | $478,524 |
| 3 | $34,688 | $23,138 | $11,550 | $466,974 |
| 4 | $34,688 | $22,561 | $12,128 | $454,846 |
| 5 | $34,688 | $21,954 | $12,734 | $442,112 |
| 6 | $34,688 | $21,318 | $13,371 | $428,742 |
| 7 | $34,688 | $20,649 | $14,039 | $414,702 |
| 8 | $34,688 | $19,947 | $14,741 | $399,961 |
| 9 | $34,688 | $19,210 | $15,478 | $384,483 |
| 10 | $34,688 | $18,436 | $16,252 | $368,231 |
| 11 | $34,688 | $17,624 | $17,065 | $351,166 |
| 12 | $34,688 | $16,770 | $17,918 | $333,249 |
| 13 | $34,688 | $15,874 | $18,814 | $314,435 |
| 14 | $34,688 | $14,934 | $19,754 | $294,680 |
| 15 | $34,688 | $13,946 | $20,742 | $273,938 |
| 16 | $34,688 | $12,909 | $21,779 | $252,159 |
| 17 | $34,688 | $11,820 | $22,868 | $229,290 |
| 18 | $34,688 | $10,677 | $24,012 | $205,279 |
| 19 | $34,688 | $9,476 | $25,212 | $180,066 |
| 20 | $34,688 | $8,215 | $26,473 | $153,594 |
| 21 | $34,688 | $6,892 | $27,797 | $125,797 |
| 22 | $34,688 | $5,502 | $29,186 | $96,611 |
| 23 | $34,688 | $4,043 | $30,646 | $65,965 |
| 24 | $34,688 | $2,510 | $32,178 | $33,787 |
| 25 | $34,688 | $901 | $33,787 | $0 |
How a Payout Annuity Works
A payout annuity turns a lump sum into a stream of income that uses up the balance over a set period. Each payment is part investment growth and part your original money. Early on, growth covers much of the income; later, the balance does more of the work until it reaches zero.
The Formulas
PMT = PV × r ÷ [1 − (1 + r)^−n]
PV = PMT × [1 − (1 + r)^−n] ÷ r
r = (1 + annual return)^(1/periods per year) − 1
Formulas shown for level payments at the end of each period; raises are handled period by period.
Planning Income
- •A yearly increase protects your income from inflation but lowers the first payment
- •Payments at the start of each period are slightly smaller than at the end
- •A conservative return assumption gives you a safety margin
- •This models drawing down your own savings; insurance annuities price differently
- •Plan for longevity; a longer payout period lowers each payment