How to use the Annuity Payout Calculator
This tool shows the monthly income a lump sum could pay over a chosen number of years.
Open the Annuity Payout Calculator →
What you need to enter
- Lump sum ($)
- Interest rate (% / year)
- Payout period (years)
The formula
Payout = lump sum × r ÷ (1 − (1 + r)^−n), with r the monthly rate and n the months, so the pot reaches zero at the end.
Worked example
Using the default values in the calculator:
- Lump sum ($): 300000
- Interest rate (% / year): 4
- Payout period (years): 20
| Monthly payout | $1,817.94 |
| Total payouts | $436,305.84 |
| Interest earned | $136,305.84 |
Tips for better results
- Compare the payout with insurer quotes, which include longevity risk.
- Consider inflation, which reduces the value of a fixed payout.
Common mistakes to avoid
- Assuming the payout lasts for life; it ends after the chosen years.
- Ignoring fees and taxes.
Please note: Calculators and guides give general estimates, not financial, tax or investment advice. Real offers depend on your lender, location and personal situation. See our Disclaimer.