Annuity Payout Calculator: Formula and Examples
Estimate a fixed payment that uses a starting balance over a chosen term.
How the calculation works
This is the mathematics of a fixed payment stream. It is not an insurance quote or a lifetime benefit; product fees, mortality assumptions, and guarantees are excluded.
Annuity Payout formula
Use the periodic rate i = (1 + annual return)^(1 ÷ payments per year) − 1. An ordinary-annuity factor is [(1 + i)^n − 1] ÷ i. Beginning-period payments multiply the factor by (1 + i).
Worked example
At 0%, $500 monthly for 20 years totals $120,000. A $120,000 balance spread over the same 240 months pays $500 monthly.
Inputs, assumptions, and interpretation
Amounts and rates apply only to the defined scenario. For projections, returns remain constant and timing follows the selected input. Taxes, market variability, and unentered costs are excluded.
Displayed values are rounded, while calculations use unrounded numbers. The charts show modeled values rather than historical performance. For background, see Investor.gov introduction to investment returns.
Frequently asked questions
Are the default rates guaranteed?
No. Default inputs illustrate how the calculation works. Enter rates and contribution amounts relevant to your scenario, and review the applicable account or scheme terms.
Why might an actual statement differ?
Actual payment dates, compounding conventions, changing returns, fees, tax treatment, and account rules can differ from a simplified projection.
How should I interpret a negative result?
Some comparisons or value changes can be negative, including investment losses or a gap between alternative scenarios. Read the result labels to distinguish a balance from a change in value.