See the income an annuity would pay
An immediate annuity turns a lump sum into a stream of income. Hand an insurer a premium and, in return, you get a regular check for a set number of years or for life. Enter your premium, the interest rate the annuity credits, and a payout period, and this tool estimates the monthly and annual income — comparing a fixed period-certain term against a simple life-expectancy horizon. Everything runs in your browser — nothing is uploaded.
How the payout is calculated
- Income comes from the standard annuity-amortization formula: the premium is spread across every payment so that the balance, growing at the rate you enter, is exactly exhausted at the end of the period. Payment = P × i ÷ (1 − (1 + i)−N), where i is the per-period rate and N the number of payments.
- The period-certain scenario runs for your fixed term and is guaranteed for that many years whether or not you're living. The life-expectancy scenario runs for the years from your current age to the life-expectancy age you enter.
- A single, level interest rate is applied throughout — no COLA or inflation adjustment. If the rate is 0%, income is simply the premium divided evenly across the payments.
- This models a self-funded schedule. A real life annuity pools mortality risk, so an insurer's lifetime quote can differ — it may pay more if you live long and stops if you don't.
An estimate for planning, not an insurance quote or financial advice. Actual annuity payouts depend on the insurer, product type, your age and gender, riders, and current rates. It ignores fees and taxes — annuity income is often partly taxable. Compare quotes from several highly rated insurers before you buy.
What is an annuity payout?
An annuity payout is the regular income an insurer pays you in exchange for a lump-sum premium. With an immediate annuity, income starts right away; with a deferred annuity, it starts later. The size of each check depends on how much you put in, the interest rate credited, how often you're paid, and how long the payments are meant to last — a fixed number of years or the rest of your life.
Period-certain vs. life annuity
- Period-certain pays for a set number of years — say 10, 20, or 30. If you die before it ends, the remaining payments go to your beneficiary. The trade-off is that a fixed term can't protect you from outliving your money if you live longer than the term.
- Life annuity pays as long as you live, however long that is. It's true longevity insurance, but payments stop at death (unless you add a period-certain or refund rider), so an early death means a smaller total.
This calculator models both as self-funded schedules so you can compare the income each one implies. A real life annuity pools many people's mortality risk, which is why an insurer can sometimes quote a higher lifetime payment than a pure do-it-yourself drawdown would support.
What drives the size of your check
- Premium: more money in means a larger check, proportionally.
- Interest rate: a higher credited rate lets each dollar stretch further, raising the payment.
- Length: the longer the payout period, the smaller each individual check, because the same premium is spread thinner.
- Frequency: monthly checks are smaller than annual ones, but you get twelve of them a year.
Is an annuity right for you?
Annuities can be a good fit if you want predictable income you can't outlive and you value that certainty over liquidity and growth. They're less compelling if you need access to the lump sum, want to leave it to heirs, or can cover your essential expenses from Social Security and a pension already. Many planners suggest annuitizing only the portion of savings needed to cover essential costs, and keeping the rest invested. Weigh it against a systematic withdrawal plan using our retirement drawdown calculator.
Frequently asked questions
How much does a $250,000 annuity pay per month?
It depends on the rate and length. Spread over a 20-year period-certain term at a 5% credited rate, a $250,000 premium supports roughly $1,650 a month. A shorter term or higher rate pays more per check; a longer term pays less. Use the calculator to match your own numbers.
What is the difference between the interest rate and the payout rate?
The interest rate is what the annuity credits to the unpaid balance each year. The payout rate is the annual income as a percentage of your premium, and it's always higher than the interest rate because each check also returns part of your principal. This tool takes the interest rate and derives the payout for you.
Will my annuity income keep up with inflation?
Not unless you buy an inflation-adjusted (COLA) annuity, which starts with smaller payments that rise over time. This calculator models level payments, so remember that a fixed check loses purchasing power each year. Our inflation impact calculator shows how much.
Is annuity income taxable?
Usually, in part. If you bought the annuity with after-tax money, each payment is split into a tax-free return of principal and taxable interest. Annuities held inside an IRA or 401(k) are generally fully taxable as ordinary income. This calculator shows pre-tax income.
What happens to the money if I die early?
With a period-certain annuity, any remaining guaranteed payments pass to your beneficiary. With a straight life annuity, payments normally stop at death unless you added a refund or period-certain rider, which lowers the monthly amount in exchange for that protection.
Fit guaranteed income into the bigger picture
Free, private, and running entirely in your browser. Model your savings, investments, and retirement income together — and track plan vs. actual — no account required.