Annuity Payout Calculator

Find the fixed payment a lump sum can sustain. Enter your starting principal, annual interest rate, payout period, and payment frequency to get the payout per period, per year, the total paid out, and the interest earned.

Quick Facts

Formula
PMT = P × i / (1 − (1 + i)^−n)
i is the interest rate per payment period and n the total number of payments; at 0% it reduces to P / n.
Model
Fixed-period (term-certain) payout
The balance keeps earning interest while payments draw it down to exactly zero at the end of the term.

Your Results

Calculated
Payout per period
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Fixed payment each period
Payout per year
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Periodic payout × payments per year
Total payout
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All payments over the full term
Total interest
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Total payout minus principal

Ready

Enter principal, rate, payout period, and frequency, then press Calculate.

How the Annuity Payout Calculator works

This tool answers the payout-phase question: if you have a lump sum earning interest, how much can it pay you every month, quarter, or year so that the balance lands at exactly zero when the term ends? It uses the standard present-value annuity payment formula — the same math a lender uses to amortize a loan, applied in reverse to your savings.

The formula

For a starting principal P, a periodic interest rate i (the annual rate divided by payments per year), and n total payments (years × payments per year), the fixed payment is:

PMT = P × i / (1 − (1 + i)−n)

If the interest rate is 0%, the formula reduces to PMT = P / n — the principal split into equal installments with no interest earned. The calculator assumes payments arrive at the end of each period (an ordinary annuity) and that the rate compounds at the payment frequency.

Worked example

Take $500,000 at 5% annual interest, paid monthly for 20 years. The periodic rate is 0.05 / 12 ≈ 0.004167 and n = 240 payments. The formula gives a payment of about $3,300 per month. Over the full 20 years that totals roughly $792,000 — the original $500,000 of principal plus about $292,000 of interest earned on the balance that had not yet been paid out.

What moves the payment most

  • Payout length: spreading the same principal over more years lowers each payment but raises the total received, because the remaining balance earns interest for longer.
  • Interest rate: a higher rate lets the same principal support a larger payment. At 0% the $500,000 example pays only $2,083 per month; at 5% it pays about $3,300.
  • Frequency: monthly, quarterly, and annual schedules of the same annual amount differ only slightly — more frequent payments draw the balance down a little sooner, so each year's total is marginally smaller.

Fixed-term versus lifetime annuities

This calculator models a fixed-period (term-certain) payout: payments stop after the chosen number of years regardless of how long you live. Lifetime annuities sold by insurers guarantee income for life and are priced on life expectancy, fees, and guarantee riders in addition to interest, so an insurer's quote for the same premium will not match this pure interest-and-principal math. Use the result here as a transparent baseline to compare against quotes.

Frequently Asked Questions

How is the annuity payout calculated?
The calculator uses the present-value annuity payment formula: PMT = P × i / (1 − (1 + i)^−n), where P is the starting principal, i is the interest rate per payment period (annual rate divided by payments per year), and n is the total number of payments (years × payments per year). The result is the fixed payment that draws the balance down to exactly zero at the end of the term.
What happens if the interest rate is 0%?
With no interest the formula reduces to PMT = P / n: the principal is simply split into equal installments. For example, $500,000 paid monthly over 20 years at 0% is $500,000 / 240 ≈ $2,083.33 per month, and the total payout equals the principal with no interest earned.
Why does a longer payout period increase the total payout?
Stretching the same principal over more payments lowers each individual payment, but the money not yet paid out keeps earning interest for longer. That extra interest raises the sum of all payments, so a 30-year payout returns more in total than a 10-year payout from the same principal and rate — just in smaller installments.
Does this calculate a lifetime annuity?
No. This models a fixed-period (term-certain) payout in which payments stop after a set number of years. Lifetime annuity quotes from insurers also price life expectancy, fees, and guarantees, so an insurer's quote for the same premium will differ from this pure interest-and-principal calculation.

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