A walkthrough, end to end.
- 1
Enter the annuity balance, expected rate of return, payout frequency, and number of years.
- 2
The calculator solves for the level periodic payout that fully exhausts the balance.
- 3
Compare against the 4% safe withdrawal rate as a sanity check.
Annuity payout (PMT solve)
Solve the present-value annuity formula for PMT, given PV (the balance), rate per period, and number of periods. Same math as a mortgage payment, but now the 'balance' is yours to be paid out.
What you can do with this.
Retirement nest egg payout
$1M at 5% return over 25 years pays out ~$5,840/mo. Use to plan retirement income from invested savings — the calculator's payout is the level monthly draw that lasts exactly your chosen term.
Comparing fixed annuity quotes
Insurance company offers $X/month for life from a $200K premium. Use the calculator with various term assumptions (life expectancy 20–30 years) to see what implied rate they're paying.
Lottery annuity payout
Lottery jackpot 'cash value' is the lump sum; advertised jackpot assumes annuity payout over 30 years. The calculator helps reverse-engineer the implied rate the lottery is using.
Inheritance income planning
$500K inheritance — what monthly income for 20 years? At 4% return: ~$3,030/mo. Useful for matching expected lifestyle expenses against an inheritance windfall.
4% rule cross-check
Common safe-withdrawal rate is 4% of starting balance. The calculator's output is more conservative for fixed terms — over 25 years at 5% return, you can sustainably withdraw ~7% (since your principal also gets paid down).
Pension lump-sum vs. lifetime payout
Pension offers $X/mo for life, OR $Y lump sum. Compute the implied rate the pension is paying using your life expectancy. If higher than your portfolio expected return, take the pension.
Required minimum distribution context
RMDs (US tax-deferred retirement accounts after age 73) are similar math but with IRS-prescribed life-expectancy tables. The calculator's general payout is a starting baseline.
Annuity payout 2026 — what's current
Higher interest rates have improved annuity payout rates. Multi-year guaranteed annuities (MYGAs) pay 5–6%; immediate annuities at age 65 pay around 7–8% on initial premium for life. Compare carefully.
Frequently asked.
No — the calculator solves for a payout that fully exhausts the balance over the chosen term. For lifetime income that doesn't deplete principal, use a lower withdrawal rate (3–4%) and treat the principal as enduring.
Yes for realistic spending power. Most retirement income is taxed as ordinary income (traditional 401(k)/IRA). Roth account withdrawals are tax-free. Subtract estimated tax to see real spending power.
Conservative: treasury yield (~4%). Moderate: balanced portfolio (5–6%). Aggressive: stock-heavy portfolio (7%+). Lower rates require more conservative withdrawal.
No. Calculations run entirely in your browser.