Annuity Payout Calculator

Use the annuity payment formula: PMT = PV × r(1+r)^n / [(1+r)^n - 1]. For a $500,000 lump sum at 5% over 20 years, you receive a fixed monthly payment until the account is depleted.

With a period-certain annuity, payments stop when the period ends — and you may outlive the money. Life annuities from insurance companies guarantee payments for your lifetime, regardless of how long you live. This eliminates longevity risk.

The classic 4% rule says you can withdraw 4% of your portfolio annually and not run out of money over 30 years. A $1 million portfolio supports $40,000 per year. Recent research suggests 3.5% may be safer in a low-return environment.

Fixed annuities pay a guaranteed amount. Variable annuities fluctuate based on investment performance and may pay more or less. Fixed annuities offer certainty; variable annuities offer upside potential but also downside risk.

It depends on how the annuity was funded. If with pre-tax money (IRA, 401k), the full payout is taxed as ordinary income. If with after-tax money, only the earnings portion is taxed. Consult a tax advisor.

An immediate annuity starts paying within a month of your lump sum deposit. A deferred annuity accumulates for years before payouts begin. Immediate annuities are commonly used by retirees to convert savings into guaranteed income.