Annuity Calculator
Calculate regular income payments from an annuity based on your purchase price, payout rate, and term. Compare monthly, quarterly, and annual payout options.
These calculators are for informational purposes only and do not constitute financial, legal, or tax advice.
These results are educational estimates only and should not be considered financial, investment, tax, or retirement advice. Future investment returns, inflation, taxes, and longevity are uncertain. Consult a qualified financial planner before making retirement decisions.
Annuity Calculator
Find out how much regular income a lump sum could generate, based on your payout rate and term.
Quick Answer
This annuity calculator takes a lump sum, a payout rate, and a payout term, and tells you the periodic payment (monthly, quarterly, or annual) that lump sum could produce over that term, in USD ($). It’s built for people who want to estimate retirement income from a fixed amount of money – not to price or recommend any specific insurance product.
Jump to:
What Is an Annuity|
What It Calculates|
How to Use|
The Formula|
Ordinary vs. Due|
PV vs. FV|
Example|
Limitations|
FAQs
What Is an Annuity|
What It Calculates|
How to Use|
The Formula|
Ordinary vs. Due|
PV vs. FV|
Example|
Limitations|
FAQs
If you’re weighing whether to convert savings into a steady stream of income, or you’re trying to understand how a series of regular payments adds up over time, an annuity calculator is the tool to reach for. It replaces guesswork with an actual number, based on math that’s been used for retirement and loan planning for decades.
This page walks through what an annuity is, how this calculator works, the formula behind it, and where its estimates stop being useful – so you know exactly what the number in front of you does and doesn’t tell you.
What Is an Annuity?
At its core, an annuity is a series of equal payments made at regular intervals – weekly, monthly, quarterly, or annually. That’s true whether you’re talking about a mortgage payment, a car loan, a retirement paycheck, or an insurance company’s annuity product.
Common real-world examples include:
• Monthly payments from a pension
• Regular withdrawals from a retirement account
• Fixed monthly loan or mortgage payments
• Structured settlement payments
• Income payments from an insurance annuity contract
Two different meanings of “annuity”
It’s worth separating two uses of the word. An annuity as a mathematical concept is simply any series of equal, regularly timed payments – this is what the calculator on this page works with. An annuity as a financial product is a specific insurance contract, sold by an insurance company, that promises a stream of payments in exchange for a premium, often with additional features like guarantees, riders, or fees. This page and calculator deal with the math; they are not a quote, offer, or recommendation for any insurance annuity product.
What Does This Annuity Calculator Calculate?
This calculator answers one specific question: given a lump sum, a payout rate, and a payout term, how much income can be paid out each period? It uses these four inputs:
| Input | What It Means |
| Purchase Price (Lump Sum) | The total amount of money being paid out over time. |
| Annual Payout / Interest Rate | The annual rate used to calculate how the lump sum is drawn down over the term. |
| Payout Term (Years) | How many years the payments should continue for. |
| Payment Frequency | How often you’d like to receive payments: monthly, quarterly, or annually. |
From those four inputs, it calculates your periodic payment amount, along with your total payout over the full term, the total interest/return included in that payout, and a monthly income equivalent for easy comparison.
This tool always solves for the payment. It doesn’t work in reverse – for example, it won’t tell you what lump sum you’d need to generate a specific target payment, or solve for the interest rate given a payment and lump sum. If you want to explore those related present-value and future-value annuity questions in general terms, the sections further down this page walk through the underlying math.
How to Use the Annuity Calculator
1
Enter your lump sum – the amount you’re starting with, entered as the Purchase Price.
2
Enter an annual payout rate – the rate used to draw down the balance over your chosen term.
3
Enter your payout term – how many years you want the income to last (1-40 years).
4
Choose a payment frequency – monthly, quarterly, or annual.
Example: $200,000 lump sum, 5.5% rate, 20-year term, monthly payments
Enter $200,000 as the purchase price, 5.5% as the rate, 20 years as the term, and select Monthly. The calculator returns a monthly payment of about $1,375.77. Over the full 20-year term, that adds up to roughly $330,185.91 in total payments – meaning about $130,185.91 of the total payout is interest/return on top of the original $200,000 principal.
Annuity Formula
This calculator uses the standard present-value-of-an-ordinary-annuity formula, solved for the payment amount:
PMT = PV × r / [1 − (1 + r)−n]
PMT – the periodic payment amount (what the calculator solves for)
PV – the present value, or lump sum you’re starting with
r – the interest rate per period (annual rate divided by the number of periods per year)
n – the total number of payment periods (years multiplied by periods per year)
This is the “ordinary annuity” version of the formula, which assumes each payment happens at the end of its period. If payments instead happened at the beginning of each period (an annuity due), every payment would have one extra period to earn interest, so the calculated payment for the same target payout would be slightly smaller. This calculator uses the ordinary annuity convention throughout, which is the standard approach for retirement income and loan payment calculations.
Ordinary Annuity vs. Annuity Due
Ordinary Annuity
Payments happen at the end of each period. Most loans, bonds, and this calculator’s payouts work this way.
Annuity Due
Payments happen at the start of each period. Rent and lease payments are common real-world examples.
The timing difference matters because money has time value – a payment received (or paid) one period earlier has that much more (or less) time to earn interest. For the same payment amount, an annuity due will always have a slightly higher present value and a slightly higher future value than an otherwise-identical ordinary annuity, because everything is shifted one period earlier. The difference is usually modest, but it grows with higher interest rates and longer terms.
Estimate Your Own Payout
Enter your lump sum, rate, and term above to see your estimated periodic income.
Present Value vs. Future Value of an Annuity
Two related, general annuity concepts come up often, even though this calculator focuses specifically on payout amounts:
| Concept | What It Answers | Example Use |
| Present Value (PV) | What is a future stream of payments worth today? | Figuring out the lump sum needed to fund a target monthly retirement payment. |
| Future Value (FV) | What will a series of regular payments grow to by a future date? | Projecting how much a monthly savings habit will be worth after 20 years of growth. |
For example, someone contributing $1,000 a month for 10 years at a 5% annual rate would have a present value of about $94,281.35 – meaning that’s roughly the lump sum today that’s equivalent to that whole payment stream. Someone instead saving $500 a month for 20 years at a 6% annual rate would end up with a future value of about $231,020.45 – the total the account would grow to by the end of that period. Both examples use the ordinary annuity (end-of-period) convention; the annuity-due versions of these same numbers would be slightly higher, since each payment gets one extra period of growth.
Example: Calculating an Annuity Payment
Say you have $100,000 and want to know how much monthly income it could provide over 10 years at a 5% annual rate.
Result: $1,060.66 per month
Over the full 10-year term, that comes to a total payout of about $127,278.62, meaning roughly $27,278.62 of the total is interest earned on top of your original $100,000. In plain English: converting that $100,000 into 10 years of monthly income at a 5% rate gets you just over $1,060 a month, with the balance being gradually drawn down to zero by the end of the term.
Factors That Affect Annuity Calculations
| Factor | Effect on the Payment |
| Larger lump sum | Increases the payment proportionally, all else equal. |
| Higher interest/payout rate | Increases the payment, since more return is being earned on the remaining balance. |
| Longer payout term | Decreases the periodic payment, since the same lump sum is spread across more payments. |
| More frequent payments | Each individual payment is smaller, but the annual total is broadly similar (slightly different due to compounding frequency). |
| Payment timing (ordinary vs. due) | An annuity due requires a slightly smaller payment to hit the same target, since each payment has more time to earn interest. |
Common Uses for an Annuity Calculator
• Retirement planning – estimating how a savings balance could convert into monthly income
• Comparing payout options – seeing how different terms or rates change your income
• Loan and repayment planning – the same underlying math applies to fixed-payment loans
• Savings planning – understanding how regular contributions add up (future value side)
• Pension and structured payout planning – modeling a fixed income stream from a known balance
It’s worth repeating: this is a mathematical calculation, not a quote or projection from any specific annuity insurance product. Actual insurance annuity contracts often include fees, guarantees, riders, and terms that a plain formula like this one doesn’t capture – more on that in the limitations section below.
Annuity Calculator vs. Compound Interest Calculator
These two tools solve related but different problems. A compound interest calculator tells you how a single lump-sum investment grows over time, left alone with no additional deposits or withdrawals. An annuity calculator deals with a series of regular payments – either payments going out (like this calculator’s payout stream) or payments going in (like a monthly savings contribution).
If you’re asking “how much will my $50,000 grow to in 10 years if I don’t touch it,” reach for a compound interest calculator. If you’re asking “how much income can $200,000 generate over 20 years” or “how much will I have if I contribute $500 a month,” that’s an annuity calculation.
Limitations of an Annuity Calculator
• Taxes – the payment figures shown are not adjusted for income tax on withdrawals.
• Inflation – a fixed payment loses purchasing power over time; this calculator doesn’t project that effect.
• Fees – real annuity products often carry administrative, mortality and expense, or advisory fees not reflected here.
• Investment risk – this assumes a fixed rate for the full term; it doesn’t model market volatility or variable returns.
• Variable interest rates – if a real product’s rate can change, actual payments may differ from this estimate.
• Insurance charges and product-specific terms – riders, surrender charges, guarantees, and death benefits on real annuity contracts aren’t reflected in a plain formula.
This calculator provides a mathematical estimate based on the numbers you enter – it is not personalized financial advice and doesn’t represent the terms of any specific insurance annuity product. If you’re considering purchasing an annuity product, review the actual contract terms and consider speaking with a licensed financial professional.
Frequently Asked Questions
What is an annuity calculator?
An annuity calculator estimates figures related to a series of regular payments – such as the periodic payment a lump sum could generate over a set term, based on an interest or payout rate.
How do you calculate an annuity payment?
Using the formula PMT = PV × r / [1 − (1+r)^−n], where PV is your lump sum, r is the interest rate per period, and n is the total number of payment periods. This calculator performs that calculation automatically based on your inputs.
What is the difference between an ordinary annuity and an annuity due?
An ordinary annuity pays at the end of each period; an annuity due pays at the beginning. Because of the time value of money, an annuity due produces a slightly higher present and future value for the same payment amount. This calculator uses the standard ordinary annuity convention.
How is the present value of an annuity calculated?
Present value is calculated as PV = PMT × [1 − (1+r)^−n] / r, which tells you what a future stream of equal payments is worth in today’s dollars, given a discount rate and number of periods.
How is the future value of an annuity calculated?
Future value is calculated as FV = PMT × [(1+r)^n − 1] / r, which shows what a series of regular payments will grow to by a future date, assuming a fixed rate of return.
Can an annuity calculator be used for retirement planning?
Yes, it’s commonly used to estimate how a retirement balance could be converted into a regular income stream over a chosen number of years, which is a core part of retirement income planning.
Does an annuity calculator account for inflation?
No. This calculator produces fixed nominal payment amounts and does not adjust for inflation or the future loss of purchasing power. Consider comparing your result against an expected inflation rate separately.
What happens if the interest rate changes?
This calculator assumes a fixed rate for the entire payout term. A higher rate increases the calculated payment; a lower rate decreases it. If you’re evaluating a product with a variable rate, actual future payments could differ from this estimate.
How does payment frequency affect an annuity?
More frequent payments (like monthly instead of annual) mean smaller individual payments, but slightly different total amounts over the year due to how often interest compounds. This calculator lets you compare monthly, quarterly, and annual payout options directly.
Is an annuity calculator the same as a retirement calculator?
No. A retirement calculator typically looks at your broader financial picture – savings, contributions, expected expenses, and timeline – to project retirement readiness. An annuity calculator focuses narrowly on converting a lump sum into a payment stream, or vice versa, which is often one input into a broader retirement plan.
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See What Your Lump Sum Could Pay You
Enter your purchase price, rate, term, and frequency above to get your estimated periodic income in seconds.
This calculator provides a mathematical estimate for general educational and planning purposes only and is not personalized financial advice, nor a quote for any specific insurance or annuity product. Results do not account for taxes, inflation, fees, investment risk, or product-specific terms. Consult a licensed financial professional before making decisions about retirement income or annuity products.