Annuity Payout Calculator

Payout per period = balance ÷ aₙ × (÷ (1 + i) if payouts arrive at the beginning of each period) where aₙ = [1 − (1 + i)⁻ⁿ] ÷ i, i = annual return ÷ payouts per year, n = years × payouts per year (aₙ is the same annuity factor the present-value side uses: the value today of 1 per period for n periods)

Balance

The lump sum you are drawing down at the start — the whole amount available, before any payout is taken

Annual return

The fixed annual return assumed on whatever is still in the account, converted to a per-period rate before use; the default 5% a year becomes 0.4167% a month

Years

How long the payouts are meant to last, multiplied by the payouts per year to give the number of periods

i

The per-period rate — the annual return divided by the number of payouts a year

n

The total number of payouts — the term in years times the payouts a year

aₙ

The annuity factor: what 1 per period for n periods is worth today at rate i. It is the number the balance is divided by, and it is the same factor the present-value page multiplies by

Payout per period

The equal amount taken out each period so that the last one brings the balance to zero — rounded to the cent, which is why the yearly totals can drift by a few cents

Use it when the money already exists as a lump sum and the question is how much can come out of it, over a payout period you choose, without leaving anything behind. That covers a retiree deciding what a pot of savings supports, someone comparing a lump sum offer against a stream of payments, and anyone checking whether a proposed payout is being spread over a term long enough to be sustainable. It is the wrong tool when the payout is meant to continue for life rather than for a fixed term — nothing here hedges the risk of living longer than the term, and a life annuity is priced from mortality tables rather than from a chosen number of years. It is also the wrong tool when the return is not fixed: a real account does not earn the same rate every period, and a bad decade early in a payout schedule does more damage than the same bad decade later.

1. The default case: 500,000 drawn down at 5% over 25 years, monthly

   1. Periodic rate: 5% ÷ 12 = 0.41667% a month.
   2. Number of periods: 25 × 12 = 300.
   3. Annuity factor: [1 − 1.0041667⁻³⁰⁰] ÷ 0.0041667 = 171.06.
   4. Payout: 500,000 ÷ 171.06 = 2,922.95 a month.
   5. Yearly payout rate: 2,922.95 × 12 = 35,075.40, which is 7.02% of 500,000.
   6. Total received: 2,922.95 × 300 = 876,885. Of that, 876,885 − 500,000 = 376,885 came from growth.

   The number worth pausing on is 7.02%, not 5%. A 5% return over 25 years supports a payout rate of about 7% a year, because the payout is spending the principal as well as the growth. Reading it the other way — assuming a 5% return means 5% a year can be taken out — is the single most common mistake this page exists to correct, and over 300 periods it is the difference between 876,885 received and roughly 625,000.

2. Payouts at the beginning of each period instead of the end

   1. Same factor as before: 171.06.
   2. Take each payout one period earlier and the whole schedule shifts: divide by 1.0041667 instead of multiplying.
   3. 171.06 × 1.0041667 = 171.77, so the payout is 500,000 ÷ 171.77 = 2,910.82.
   4. Total received: 2,910.82 × 300 = 873,246.

   Getting the money sooner means getting less of it — 2,910.82 against 2,922.95, about 0.41% less. The direction is worth checking because the sign is easy to flip: taking each payout a period early means the balance has one period less to earn on it, so the same 500,000 has to stretch further. The whole difference is a single multiplication by (1 + i), which is why the two annuity pages treat the timing choice as a one-line adjustment rather than a second formula.

3. The mirror check: feeding the present-value page's answer back in

   1. The present-value page asks what 500 a month for 20 years at 7% is worth today, and answers 64,491.25.
   2. Hand that same 64,491.25 back to this page as the balance, at the same 7%, 20 years and monthly.
   3. Annuity factor: [1 − 1.0058333⁻²⁴⁰] ÷ 0.0058333 = 128.98.
   4. Payout: 64,491.25 ÷ 128.98 = 500.00.
   5. Total received: 500 × 240 = 120,000; growth: 120,000 − 64,491.25 = 55,508.75.

   All three of those last figures are the present-value page's own numbers, printed under different names — its total payments and its discount. Two pages, written separately, agreeing to the cent in three places is what it looks like when they are genuinely inverse rather than merely similar. If you ever change the annuity factor in one of them, this example fails and the other does not.

4. A 0% return, where the arithmetic is bare

   1. With no growth the factor collapses to the number of periods: 300.
   2. Payout: 500,000 ÷ 300 = 1,666.6666…, which rounds to 1,666.67.
   3. Yearly rate: 1,666.67 × 12 = 20,000.04, which is 4.00% of 500,000 — exactly 1 ÷ 25.
   4. Total received: 1,666.67 × 300 = 500,001.

   That last figure is a dollar more than the balance, so the growth column reads 1 rather than 0, and at a 0% return there is no growth to speak of. It is not an error: each payout is rounded to the cent, and 0.0033 of a cent too much, multiplied by 300 periods, is a dollar. The alternative — computing the total from the unrounded payout — would make the panel print 1,666.67 and 500,000 in the same view, at which point the reader cannot tell which of the two is wrong. A visible dollar of rounding is a better trade than an invisible inconsistency, and the 4.00% line is the cleanest statement of the floor: with no growth, the payout rate is 1 ÷ years.

5. Paid once a year instead of monthly

   1. Periodic rate: 5% a year, used as-is.
   2. Number of periods: 25.
   3. Annuity factor: [1 − 1.05⁻²⁵] ÷ 0.05 = 14.09.
   4. Payout: 500,000 ÷ 14.09 = 35,476.23 once a year.
   5. Yearly rate: 35,476.23 ÷ 500,000 = 7.10%.

   The payout rate rises from 7.02% monthly to 7.10% yearly, and the reason is timing rather than arithmetic: paid once a year, each payout arrives later and the balance carries it longer, so the account has to give up a little more. The same comparison across all four frequencies runs 7.10% yearly, 7.05% twice a year, 7.03% quarterly, 7.02% monthly — a spread of eight hundredths of a percent over the whole range, which is also a fair sense of how much the frequency choice is worth.

The return is a single fixed number for the whole term. Real accounts do not earn the same rate every year, and the order matters: a bad decade early in a payout schedule leaves less money working for you for the rest of it, and no single average rate can show that. Nothing here accounts for fees, taxes, or inflation. The payouts are nominal amounts, so a schedule that looks sustainable for 25 years buys less in year 25 than in year 1. The payouts are rounded to the cent, so the totals can be a few cents away from the unrounded arithmetic — up to half a cent per period, which over 300 periods is at most 1.50. The 0% example shows the effect at its most visible, a dollar of apparent growth where the true figure is zero. Negative returns are not accepted. With a negative rate the payout rate drops below 1 ÷ years and the schedule becomes a way to lose money slowly, which is not the question this page is built to answer. The term is fixed, so this is not a life annuity. Nothing here covers the risk of the term running out while you are still there to need the money; a life annuity is priced from mortality tables and transfers that risk to the issuer, which is why its payouts cannot be reproduced from a balance and a rate alone. The withdrawal rate is arithmetic, not advice. It is the rate at which this particular balance is exhausted over this particular term at this particular return, and changing any of the three changes it. No regulator publishes a safe withdrawal rate, and the widely quoted rules of thumb come from historical return studies rather than from a formula.

What does this annuity payout calculator do?

It takes a lump sum and a term and works out the equal payout that empties the balance exactly when the term ends. It is the reverse of the usual annuity payout question: the present-value page starts with a payment and asks what the stream is worth today, while this one starts with the money you have and asks what it will support each period. The annuity factor is the same number in both, used as a divisor here and as a multiplier there.

Why is the withdrawal rate 7% when the return is only 5%?

Because the payout is spending the principal as well as the growth. Over 25 years, a 5% return supports about 7.02% a year; over 40 years the gap narrows, and over a term long enough that the principal is barely touched, the withdrawal rate approaches the return itself. The two ends are worth holding together: with no growth at all the rate is simply 1 ÷ years, and with a very long term it converges on the return. Everything in between is a blend of the two, which is what the reference table plots.

Does taking the money at the beginning of each period change much?

It lowers the payout by about one period's worth of return — 2,910.82 against 2,922.95 on the default case, roughly 0.41%. The direction surprises people, so it is worth stating plainly: each payout taken a period earlier has one period less to earn, so the same lump sum has to stretch further and each payment is smaller. Choosing the beginning of the period is a real advantage only if you need the money sooner, not because it produces more of it.

Is this the same as planning retirement income?

It is one half of it. What this page does is arithmetic: given a balance, a rate and a term, what payout exhausts the balance. Retirement income planning has to decide the term without knowing it, since nobody knows how long they will live, and that is the part a life annuity prices instead. It also has to survive returns that are not fixed. Use this page for the arithmetic of a fixed term, and treat the answer as a ceiling rather than a plan.

What happens if the balance earns more or less than the rate I enter?

The schedule is thrown off, and by an amount that is not symmetric. Earning more than assumed leaves a balance at the end of the term, which is a pleasant surprise. Earning less means the money runs out early, and the shortfall lands in the years when the balance is smallest and there is nothing left to recover with. The single fixed rate is the largest simplification on this page, and the reason the answer is best read as a midpoint.

Can I use it the other way round, to find the balance a given payout needs?

Yes, and that is exactly what the present value of an annuity calculator does: the same five inputs, solving for the balance instead of the payout. The two pages are inverse functions of one another, and the mirror example on this page shows it working in both directions to the cent — 64,491.25 today and 500 a month for twenty years are two views of the same arrangement.

• 26 CFR 20.2031-7(d)(2)(iv)(A) and (B) — the United States regulation that defines the annuity factor itself: subtract the term-certain remainder factor from 1.000000 and divide by the interest rate, then apply an adjustment factor when payments are made at the end of monthly or quarterly periods — Internal Revenue Service regulation, via the Electronic Code of Federal Regulations (United States, current as of 2026)
• Annuities — how a single payment called a premium buys a stream of periodic payments, and how an immediate annuity differs from a deferred one — FINRA (Financial Industry Regulatory Authority), United States
• Planning for retirement — drawing down savings over a retirement, and why the rate that is sustainable depends on how long the money has to last — Consumer Financial Protection Bureau, United States