Annuity Payout Calculator
How much monthly income can a lump sum buy? This calculator shows what an immediate annuity would pay for any amount, rate, and term.
How to use this calculator
- Enter lump sum to convert.
- Enter guaranteed interest rate.
- Enter payout term.
- Your results appear instantly below and update as you change the numbers.
How this calculator works
An immediate annuity is priced like a loan in reverse: the lump sum is the present value, and the monthly payout is what depletes it over the term at the guaranteed rate. At 5% over 20 years, $500,000 pays about $3,300 a month and returns roughly $793,000 total. A lifetime annuity instead guarantees income for as long as you live — the trade for that longevity protection is losing control of the money.
Frequently asked questions
What is the difference between a fixed-term and lifetime annuity?
A fixed-term (period-certain) annuity pays for a set number of years — if you die early, the balance goes to your heirs. A lifetime annuity pays as long as you live, pooling mortality risk with other buyers: those who live long win, those who die early effectively subsidize them. Most retirees who want a paycheck for life choose a lifetime annuity; the calculator models the fixed-term version so the math is transparent.
Is an annuity better than managing the money myself?
An annuity guarantees the income and removes market and spending risk — genuinely valuable for people who fear outliving their money. The costs: you give up control, a fixed payment loses buying power to inflation, and fees on many retail annuities are high. A common middle path is a small fixed-term or lifetime annuity for essential expenses, with the rest invested.
How do annuities compare to the 4% rule?
At 5%, a 20-year annuity pays out about 7.9% of the principal per year — far more than the 4% rule — because it guarantees the money runs out exactly at the term. A lifetime annuity can beat 4% too, but only because it stops at death. The 4% rule preserves principal for 30 years. They answer different questions: guaranteed depletable income vs sustainable portfolio income.
Disclaimer: Results are estimates for general information only and do not constitute financial, tax, or legal advice. Figures reflect 2026 rules and may change. Always confirm current limits and consult a qualified professional before making decisions. Official figures: IRS.gov · 2026 limits per IRS tax inflation adjustments.