Annuity Payout Calculator
Find the monthly income a lump sum can pay, or how long your money will last at a chosen withdrawal.
Spending a lump sum
If you have a lump sum, say from a pension, a sale or savings, you can ask two questions. How much can I take each month for a set number of years? Or, if I take a given amount each month, how long will the money last?
Example
$500,000 earning 4% a year can pay about $2,639 a month for 25 years, ending at zero. A withdrawal of $2,800 a month from the same sum lasts about 22 years and 8 months. The most you can take without ever using up the capital is just the interest, about $1,667 a month.
This assumes a steady return and level withdrawals. In real life returns vary and prices rise, so many people take less at the start. This is general information, not advice.
How long will my money last?
This is one of the most common retirement questions. Switch to the "How long it lasts" tab, enter your savings, the yearly return you expect and the amount you want to withdraw each month. The calculator shows how long the money will last, and the highest withdrawal that never touches the capital.
For example, 500,000 earning 4% a year and paying out 2,800 a month lasts about 22 years and 8 months. Cut the withdrawal to 1,600 a month, which is below the monthly interest, and the money never runs out on these assumptions.
Annuity payout versus fixed withdrawals
- A fixed-period payout pays a level amount for a set number of years and ends at zero.
- An insurance annuity pays for life, with the insurer taking the risk of living longer than expected.
- A withdrawal plan from your own investments keeps control but carries market risk.
What this calculator leaves out
It uses a steady return and level withdrawals. In real life returns vary and prices rise, so many people start lower and adjust over time. It also ignores tax and fees. For a commercial annuity, ask the provider for a quote, since payouts depend on age, health, country and rates.
Next steps: Retirement Calculator, Pension Calculator (Lump Sum vs Monthly), Annuity Calculator.
Frequently asked questions
How do I calculate how long my money will last?
Divide your monthly interest by your withdrawal to see if it is sustainable. If the withdrawal is higher, the number of months is −ln(1 − balance × r ÷ withdrawal) ÷ ln(1 + r). The calculator does this for you.
What is a safe withdrawal rate?
A common guide is about 4% of the starting balance a year, adjusted for inflation. It is a rule of thumb, not a promise, and depends on how long you need the money to last.
Does the calculator include inflation?
No. Withdrawals are level, so their buying power falls over time. Test a lower starting withdrawal for a more cautious view.
What interest rate should I use?
Use a cautious estimate of what the money can earn after fees. Try a lower rate to see how sensitive the result is.
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