Annuity Calculator
Work out the monthly payout from a lump sum, how long your money lasts at a set withdrawal, how much a deferred annuity grows before payouts start, and the tax-free share of each payment.
Annuity calculator: monthly payout
How long will my annuity last?
Annuity growth calculator (accumulation phase)
How the annuity payout is calculated
A fixed-period annuity pays out a balance plus interest in equal monthly payments, like a mortgage in reverse: payment = balance × r ÷ (1 − (1 + r)−n), where r is the monthly rate and n the number of payments. Example: $250,000 at 5% paid monthly for 20 years is $1,649.89 a month ($395,973 in total, so $145,973 is interest). If payments start at the beginning of each month (an annuity due), each is $1,643.04.
Annuity payout calculator vs. life annuity quotes
This calculator handles a period-certain payout from a known balance and rate. A life annuity bought from an insurer pays for as long as you live, and the insurer prices it from its own mortality tables, fees and interest rates, so a quote can differ from the figure here. Use the result to check whether a quote is reasonable: a lifetime payout well below the 20- or 25-year figure at a similar rate means you are paying for longevity protection (or high fees).
Taxes on annuity payments: the exclusion ratio
For a non-qualified annuity (bought with after-tax money), part of each payment is a tax-free return of your cost. Under the IRS general rule in Publication 939, the tax-free share is the exclusion percentage: your investment in the contract ÷ the expected return, and for a fixed-period annuity the expected return is the number of monthly payments × the payment. If the $250,000 above was all after-tax money, 63.14% of each payment is tax-free. Payments from an annuity inside an IRA or 401(k) are generally fully taxable; leave the cost box empty for those and treat the whole payment as income.
How long will an annuity or lump sum last?
Withdrawing $1,800 a month from $300,000 earning 4% lasts about 20 years 3 months. If the monthly withdrawal is no more than the interest earned (here $1,000 a month), the balance never runs out.
Annuity growth: the accumulation phase
A deferred annuity grows tax-deferred until you start payouts. $50,000 plus $500 a month at 6% for 20 years grows to about $396,531. Fees (mortality and expense charges, rider fees, surrender charges) reduce the real return, so enter a rate net of fees.
Common questions
How much does a $250,000 annuity pay per month?
About $1,649.89 a month for 20 years at 5%; a life annuity quote depends on your age and the insurer.
What is an annuity due?
An annuity whose payments come at the start of each period; each payment is smaller by one month's interest.
Are annuity payments taxable?
Payments from a qualified (IRA or 401(k)) annuity are generally fully taxable; for a non-qualified annuity, the exclusion ratio share is tax-free (IRS Publication 939).
How long will $300,000 last at $1,800 a month?
About 20 years at a 4% return.
Sources
- IRS Publication 939: General rule for pensions and annuities
- NAIC: Annuities
- SEC Investor.gov: Financial tools and calculators
More retirement calculators: 401(k) Calculator with Employer Match · 401k or Roth IRA · Backdoor Roth IRA Calculator · Thrift Savings Account (TSP) & CalPERS Pension Calculator
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General information, not financial, tax or legal advice. Check important numbers with the official source before acting on them.