An annuity payout calculator shows the level monthly income a lump sum can pay for a set number of years. The money you haven't drawn yet keeps earning, so you collect more than you put in.
It prices a payout for a fixed period, often called period certain. Lifetime income needs an insurer's quote instead.
What the monthly figure assumes
P is the lump sum. Each payment comes at the end of a month, after the balance has earned a month's return.
The payment never changes, and the last one empties the pot. Fees, tax and inflation aren't in the sum, so allow for them yourself.
How much does $100,000 pay each month?
Here's $100,000 at a steady 4% return, paid out over five different periods:
| Payout period | Monthly payout | Total withdrawn | Of which growth |
|---|---|---|---|
| 10 yr | $1,012 | $121,494 | $21,494 |
| 15 yr | $740 | $133,144 | $33,144 |
| 20 yr | $606 | $145,435 | $45,435 |
| 25 yr | $528 | $158,351 | $58,351 |
| 30 yr | $477 | $171,870 | $71,870 |
The payout scales with the lump sum, so $250,000 pays 2.5 times these amounts. Stretching 20 years to 30 cuts each payment by about a fifth, from $606 to $477. Yet you collect $26,435 more in total, because the balance earns for longer.
Which return should you enter?
For money you invest yourself, enter the return you expect after fees, then try a lower one. Over 20 years, the rate moves the payout a lot:
| Return you enter | Monthly payout | Total withdrawn |
|---|---|---|
| 0% | $417 | $100,000 |
| 2% | $506 | $121,412 |
| 4% | $606 | $145,435 |
| 6% | $716 | $171,943 |
At 0%, you get your own money back in 240 equal parts: $417 a month. Everything above that comes from growth.
Checking an insurer's period-certain quote? Keep the lump sum and the period, then change the rate until the payout matches. That's the interest rate built into the offer. Compare it with what the same money would earn elsewhere.
Period certain or lifetime income?
FINRA defines annuitization as converting an annuity into regular payments, either for life or "for a specified number of years." The calculator covers only the fixed period.
The NAIC's buyer's guide lists four choices for how long income can last:
- For your lifetime.
- For the longer of your lifetime or your spouse's lifetime.
- For a set time period, which is what this calculator prices.
- For the longer of your lifetime or a set time period.
The option also decides what your heirs get. The guide warns that your survivors may get no payments if you die before the payment period ends. And every promise rests on the insurer: FINRA says an annuity is only guaranteed while its issuer stays in business.
The immediate annuity calculator explains how insurers quote them.
How many years should the payout cover?
Plan for a long life, not an average one. The Social Security Administration's 2023 period life table gives a 65-year-old man 18.12 more years on average. A woman of 65 gets 20.66.
The same table tracks survivors. Of 79,084 men alive at 65, 35,529 reach 85, or 45%. For women, it's 49,469 of 87,399, or 57%. By 90, it's still 24% of men and 35% of women.
So a 20-year payout started at 65 ends while most women that age are still alive. If the pot must never run out, you can only spend the return: $100,000 × 4% ÷ 12 = $333.33 a month. The perpetuity calculator values that kind of endless payment.
Why the balance stays high for years
A drawdown only shrinks in a straight line when the return is zero. Early on, the return covers much of each payment, so the balance falls slowly. Near the end, there's little left to earn anything, and it drops fast.
What's left of $100,000 during a 25-year payout
Year-end balance at three steady annual returns
- 0% return $0
- 4% return $0
- 7% return $0
Show the year-end balances
| Year | 0% return | 4% return | 7% return |
|---|---|---|---|
| 5 | $80,000 | $87,105 | $91,162 |
| 10 | $60,000 | $71,359 | $78,633 |
| 15 | $40,000 | $52,135 | $60,872 |
| 20 | $20,000 | $28,661 | $35,694 |
After 15 of the 25 years at 7%, $60,872 of the original $100,000 is still invested. That's also why a market fall early in the payout hurts most. Real markets don't deliver the steady return the calculator assumes.
How much of each payment is taxed?
Under US federal rules, it depends on whether the money was taxed before it went in. IRS Publication 575, written for 2025 returns, says payments are fully taxable if you have no cost in the contract. Money taken from your pay before tax doesn't count as cost.
Did you pay with after-tax money, as with an annuity bought outside a retirement plan? Then part of each payment returns your cost tax-free. For a fixed period, IRS Publication 939 has you divide your cost by the expected return. That's the payment times the number of payments.
Say you paid $100,000 for a 20-year payout that matches the 4% row above. Then $100,000 ÷ $145,435 = 0.688, so about $417 of each $606 payment is tax-free. The other $189 is growth, and FINRA notes that annuity gains are taxed at ordinary income rates.
A level payment buys less every year
The payout never rises, but prices usually do. Here's what $1,000 a month is worth at today's prices, from the buying power calculator:
| Year of payout | Prices rise by | Buying power of $1,000 |
|---|---|---|
| 10 yr | 2% | $820 |
| 20 yr | 2% | $673 |
| 10 yr | 3% | $744 |
| 20 yr | 3% | $554 |
At 3% a year, the payment in year 20 buys only what $554 buys now. For income that keeps pace, enter your expected return minus inflation. With 5% returns and 3% inflation, that's about 2%, or $506 a month from $100,000 over 20 years. Read that figure at today's prices, and raise each payment in line with inflation.
Sources
- FINRA, Annuities (investor information)
- NAIC, Buyer's Guide for Deferred Annuities (2022)
- IRS, Publication 575: Pension and Annuity Income (for 2025 returns)
- IRS, Publication 939: General Rule for Pensions and Annuities (Rev. December 2025)
- Social Security Administration, Actuarial Life Table: period life table 2023, as used in the 2026 Trustees Report