Annuity Payout Calculator
Estimate guaranteed monthly income stream payouts from a lump-sum annuity investment.
Guaranteed Payout Output
Turning a balance into an income you cannot outlive
An annuity payout converts a lump sum into a stream of payments. The insurer takes the balance and guarantees income for a fixed term or for life, and the size of each payment depends on the amount, your age, the interest rate environment, and the guarantees attached. What you are buying is longevity insurance — protection against the risk of living longer than your money.
Every guarantee costs income. A single-life annuity pays the most and stops at your death. A joint annuity continues to a spouse and therefore pays less. A period certain guarantees payments for a minimum number of years to your estate, and inflation-linked payments start markedly lower in exchange for rising later. None of these is free — each one trims the monthly figure, sometimes substantially.
The main trade-off is irreversibility. Once the balance is annuitised it is generally no longer yours as capital: you cannot take a lump sum for an emergency and there may be nothing left for heirs. Against that, an annuity removes sequence-of-returns risk entirely and puts a floor under essential spending. A common compromise is to annuitise enough to cover fixed costsand keep the rest invested for flexibility.
Frequently asked questions
How is an annuity payout calculated?
Monthly payout depends on lump-sum principal, guaranteed annual growth rate, and expected payout duration in years.
How long will my annuity payments last?
That depends on the balance, the payout rate and the assumed return. A fixed-period annuity pays a set number of years; a life annuity pays until death regardless of how long that is, which is precisely what you are buying. This calculator solves the arithmetic of a fixed-period drawdown.
What is the 4% rule and does it still hold?
It is the finding that a portfolio withdrawing 4% of its initial value, adjusted for inflation, historically survived 30 years in US data. It was never a law - it assumed a specific asset mix and historical returns, and later work suggests lower starting rates for longer retirements or lower expected returns. Treat it as a reference point, not a guarantee.
What happens to my annuity when I die?
It depends entirely on the contract. A straight life annuity stops, which is why it pays the most. Period-certain and joint-and-survivor options continue payments to a beneficiary or spouse, and cost you a lower monthly amount in exchange. The trade-off between income and legacy is the central decision in choosing a payout option.