Annuity Calculator
Estimate the fixed monthly income a lump sum would pay out over a set period at a guaranteed rate -- a period-certain fixed annuity, not a lifetime, variable or indexed contract.
0 = immediate annuity.
Period-certain: fully paid out by the end.
Monthly income
$1,649.89
Balance when payout starts
$250,000
Total paid out over the term
$395,973
Of the $395,973.44 paid out, $145,973.44 is interest earned during the payout period -- the rest is your own premium paid back to you.
How it's calculated
If you choose a deferral period, the premium first grows at the guaranteed fixed rate using the same compounding engine as every other calculator on this site:
balance at payout start = premium × (1 + r/12)12 × deferral years
The monthly payout is then the standard loan-amortization payment formula run in reverse -- the same math used to calculate a mortgage payment, applied here to annuitizing a lump sum instead of borrowing one, sized so the balance reaches exactly $0 at the end of the payout period:
payment = balance × i / (1 − (1 + i)−n), i = effective monthly rate, n = payout months
Worked example
The calculator's own defaults: a $250,000 premium, an immediate annuity (0 years deferred), a 5% guaranteed fixed rate, paid out over 20 years.
| Balance when payout starts | $250,000.00 |
| Monthly payment | $1,649.89 |
| Total paid out over 20 years | $395,973.44 |
| Interest earned during payout | $145,973.44 |
Paying $1,649.89/mo for exactly 240 months against a $250,000 balance earning 5% runs the balance to precisely $0 -- checked independently in this site's own test suite, not just asserted here. Plug the same numbers into the calculator above and it reconciles to the cent.
Frequently Asked Questions
What kind of annuity does this calculator model?
A period-certain, FIXED-rate annuity only: a lump sum credited a single guaranteed rate, paid out in equal monthly installments that fully exhaust the balance by the end of a stated number of years. It does not model a VARIABLE annuity (payout tied to investment sub-account performance, with no guaranteed rate), an INDEXED annuity (payout tied to a market index with a cap and floor), or a LIFETIME annuity (payout depends on the insurer's own mortality assumptions and any guarantee riders, which vary by carrier and aren't public numbers this calculator could model honestly). If your contract is any of those, its real payment will differ from what's shown here.
Are annuities FDIC insured like a bank CD or savings account?
No -- annuities are insurance contracts, not bank deposits, so FDIC insurance doesn't apply to them at all. Instead, each state has its own guaranty association that provides a backstop if an insurer fails, with limits that vary by state -- commonly in the $100,000-$500,000 range for annuity contract value, according to NOLHGA-affiliated sources -- unlike the FDIC's uniform $250,000 federal limit on bank deposits. Check your own state's guaranty association for its actual coverage limit before assuming a specific figure.
What's the difference between an immediate and a deferred annuity?
An immediate annuity starts paying out right away (enter 0 for "years before income starts"); a deferred annuity credits the guaranteed rate for a chosen number of years FIRST, growing the original premium, and only then starts the payout phase on the larger, grown balance. This calculator handles both: the deferral period uses the same compounding math as every other growth calculator on this site, and the payout phase applies the amortization formula to whatever balance exists once income begins.
Why does the payment amount depend on the payout period I choose?
Because a period-certain annuity is designed to run the balance to exactly zero by the end of the term you choose -- spreading the same lump sum over more years means smaller monthly payments (but more total interest earned along the way), while a shorter term means larger payments that draw down principal faster. There's no single "correct" payout period; it depends on how long you need the income to last.
Does this calculator account for annuity fees or surrender charges?
No. Real annuity contracts often carry mortality and expense (M&E) fees, administrative charges, and surrender charges for withdrawing early -- all of which reduce your actual return below the stated contract rate and vary enormously by carrier and product. This calculator assumes the full guaranteed rate applies with no fees subtracted; read your specific contract's fee schedule before relying on this as an exact figure.
Figures on this page are estimates from the inputs you enter, not financial advice, and this site is not affiliated with any employer, plan administrator, bank or the IRS. Real accounts vary by plan rules, taxes and fees this tool doesn't model -- see the Terms.