Annuity Payout Calculator

Dividing a lump sum by the number of payments you want it to last for badly understates what you can actually withdraw each period, because it ignores that the remaining balance keeps earning interest while you draw it down. This calculator solves for the fixed periodic payment a lump sum can sustain over a set number of periods at a given rate, so the balance runs out exactly on schedule rather than early or with money left over.

This is the math behind converting a lump sum — a pension buyout, an inherited IRA, an annuity purchase, retirement savings you want to spend down on a schedule — into a predictable paycheck-like income stream, and it's the calculation an insurance company runs in reverse when it prices an annuity contract's payout rate.

The lump sum and rate you're testing are calculated locally in your browser. There's no login required to model a payout on retirement savings or a settlement you're actually deciding what to do with.

The payment amount is solved so that the lump sum, drawn down by that fixed payment every period while the remaining balance keeps earning interest, reaches exactly zero after the specified number of periods — neither running out early nor leaving a surplus.

Because the balance keeps earning interest throughout the payout, the total amount paid out over the full term is typically more than the original lump sum — the difference shown as interest earned is money the balance generated along the way, not just your principal being handed back to you.