Annuity Payout Calculator
Find the regular payment a lump sum provides.
12 = monthly
Results update as you type.
How it works
An annuity turns a lump sum into a stream of regular payments, and this calculator finds the payment amount from your principal, interest rate, and payout period. You enter the principal, the annual interest rate the money earns, the number of years of payouts, and how many payments per year, and it returns the payment per period and the total paid out over the term. The formula is the standard amortization equation, the same one that determines loan payments, applied in reverse to draw down savings: it finds the level payment that, with interest continuing to accrue on the shrinking balance, exactly empties the principal by the end of the term. Because the remaining balance keeps earning interest, the total paid out is more than the original principal. This is useful for planning retirement income, structured settlements, or any situation where you convert a lump sum into steady cash flow, and for understanding how much a pension or annuity product should pay. A higher interest rate or a shorter term produces a larger payment; a longer term spreads the money thinner. Set payments per year to twelve for monthly income. Note this models a fixed-term annuity that depletes the principal; a lifetime annuity that pays as long as you live is priced differently using life expectancy and is offered by insurers. Enter your principal, rate, and term to compute the annuity payout.
Payment = P × r / (1 − (1 + r)^−n)
The level payment that exhausts a principal over a set number of periods is the principal times the periodic interest rate, divided by one minus the quantity one plus the rate raised to the negative number of periods. It is the same amortization formula used for loan payments, applied to draw down a lump sum with interest.
Source:Time value of money
We review all our tools from time to time to ensure accuracy.
Worked example
How to use this calculator
- 1
Enter your values
Enter principal amount, annual interest rate and payout period.
- 2
Adjust the options
Adjust payments per year if they apply — sensible defaults are already set.
- 3
Read your result
Payment per period updates instantly as you type — no button to press.
Frequently asked questions
How is an annuity payout calculated?
It uses the amortization formula: the payment equals the principal times the periodic interest rate, divided by one minus one plus the rate to the power of the negative number of periods. This finds the level payment that exactly exhausts the principal, with interest, over the term. The calculator does this from your inputs.
Why is the total payout more than the principal?
Because the money remaining in the annuity keeps earning interest while it is being paid out. Each payment is partly return of principal and partly interest earned on the balance still invested. Over the full term, that accumulated interest means you receive more in total than the original lump sum you started with.
What affects the size of the payment?
A larger principal, a higher interest rate, or a shorter payout period all increase the payment. A longer term spreads the same principal over more payments, making each smaller. The interest rate matters because a higher rate lets the shrinking balance earn more, supporting larger withdrawals for the same starting amount.
Is this a lifetime annuity?
No, this calculates a fixed-term annuity that pays for a set number of years and then depletes the principal. A lifetime annuity, sold by insurers, instead pays as long as you live and is priced using life expectancy and mortality pooling. This calculator suits planning a self-managed drawdown over a chosen period.
How do I get monthly payments?
Set the payments per year to twelve. The calculator then computes a monthly payment using a monthly interest rate over the total number of months. For quarterly payments use four, and for annual payments use one. The payment frequency changes both the payment size and how interest compounds within the term.