Annuity Payout Calculator
An annuity payout is the steady periodic amount you can draw from a lump sum so that it lasts exactly a set number of years, earning a return on the remaining balance. It is the mirror image of a loan payment — money flowing out rather than in.
Enter the starting balance, an expected annual return, and the number of years the money must last. The calculator returns the monthly payout and the total withdrawn.
It is useful for planning a fixed drawdown in retirement, or for understanding any situation where a pot of money must be spread evenly over a known number of years.
Enter your values to see the result.
How this is calculated
An annuity payout is the steady periodic amount you can draw from a lump sum so that it lasts exactly a set number of years, while the remaining balance keeps earning a return. It is the mirror image of a loan payment: money flows out rather than in, but the maths is identical. The formula is PMT = P × r ÷ (1 − (1 + r)^−n), where P is the starting balance, r is the monthly rate (annual ÷ 12) and n is the number of monthly payouts.
Each payout covers the interest earned that month plus a slice of principal, so the balance declines to zero exactly at the end of the term. The total withdrawn is the payout times the number of months, and the interest earned along the way is that total minus the starting balance.
The model assumes a fixed return, a fixed term, and no inflation adjustment to the payouts. It does not account for longevity risk (outliving the term), variable investment returns, inflation eroding the real value of fixed payouts, or required minimum distribution rules. For indefinite retirement income, the retirement nest egg calculator (4% rule) is a better starting point.
Worked example
A $300,000 balance, 5% annual return, spread over 25 years.
- 1Monthly rate r = 0.05 ÷ 12 = 0.004167; months n = 25 × 12 = 300.
- 2Discount factor (1 + r)^−n = 1.004167^−300 ≈ 0.287.
- 3Monthly payout = 300,000 × 0.004167 ÷ (1 − 0.287) ≈ $1,754.
- 4Total withdrawn = 1,754 × 300 ≈ $526,200; interest earned ≈ $226,200.
Frequently asked questions
- How is the payout calculated?
- It uses PMT = P·r / (1 − (1+r)⁻ⁿ), where P is the balance, r is the monthly rate and n is the number of monthly payouts — the same amortisation formula as a loan.
- Will the money really last that long?
- Only if the assumed return is achieved steadily. Market volatility can shorten or extend the period; many retirees use a lower rate or a variable withdrawal to be safe.
- How does this differ from the 4% rule?
- The 4% rule targets indefinite (30-year) sustainability with inflation adjustments. This calculator spreads the balance over a fixed term with no inflation adjustment.
- Will the money really last that long?
- Only if the assumed return is achieved steadily. Market volatility can shorten or extend the period; many retirees use a lower assumed rate or a variable withdrawal to be safe, and revisit the calculation each year.
- How does this differ from the 4% rule?
- The 4% rule targets roughly indefinite (30-year) sustainability with inflation adjustments. This calculator spreads the balance over a fixed term with no inflation adjustment, so the real value of each payout falls over time.
Related calculators
Method: amortisation payout formula (mirror of a loan payment). No external data source. Last updated: September 2026.
These results are indicative estimates for planning only and do not constitute financial advice. Actual loan terms, tax rules, investment returns and product conditions vary by country, provider and your personal circumstances. Always confirm figures with your bank, tax authority or a qualified financial adviser before making decisions.