Annuity Calculator
Turn a lump sum into an income stream — or work backwards from the income you want to the premium it requires. Choose monthly, quarterly, or annual payouts, payment timing, and an optional annual increase (COLA), and see the total paid out, the interest earned, and a year-by-year schedule that drains the balance to zero. All in your browser.
Year-by-year payout schedule
| Year | Payments | Interest | End balance |
|---|
This models a fixed-period annuity: an income that fully exhausts the principal over the term while the balance keeps earning (the schedule above ends at ≈ $0). Real annuity products vary — lifetime annuities pay until death (you can't outlive them but forfeit unused principal), and insurer fees, riders, and guarantees change the numbers. Treat this as the underlying math, not a quote.
Why the payout beats simple division
It's tempting to think a $250,000 pot over 20 years is just $250,000 ÷ 240 months ≈ $1,042/month. But the unpaid balance keeps earning a return the entire time, so the real income is higher — the interest the pot generates is part of what you receive. That's the gap between the "total payout" and your original premium in the results.
Income certainty has a cost
The appeal of an annuity is a predictable paycheck you can't outlive (in the lifetime version) or that lasts a known term (the fixed-period version here). The trade-off is flexibility and, with real products, fees. Use this to understand the underlying value of an income stream; compare any actual insurer quote against it, and weigh it next to simply drawing down an invested portfolio yourself.
Related
- Personal finance hub — all our money calculators and guides
- Retirement drawdown — self-managed withdrawals
- FIRE calculator — the number you need first
- Compound interest — how the lump sum is built
FAQ
Is anything I enter sent to a server?
No. The calculator runs entirely in your browser — open DevTools → Network and confirm. Nothing you type is uploaded.
What kind of annuity does this model?
A fixed-period annuity: a lump sum that pays a level monthly income for a set number of years, with the remaining balance still earning a return the whole time. At the end of the term the principal is fully paid out. It's the cleanest version of the math and a good way to see what an income stream is worth.
How is the payment calculated?
It's the present-value-of-an-annuity formula solved for the payment: PMT = PV · i / (1 − (1 + i)^−n), where PV is your lump sum, i is the return per payout period (annual ÷ 12 for monthly, ÷ 4 for quarterly), and n is the number of payments. Because the unpaid balance keeps earning, the total paid out is more than your premium — that extra is the interest. The year-by-year schedule shows the balance draining to ≈ $0 in the final year.
What does "Premium needed for income" mode do?
It runs the same formula backwards: instead of asking what income a lump sum supports, you enter the income you want — say $2,000/month for 25 years — and it returns the premium that funds it: PV = PMT · (1 − (1 + i)^−n) / i. Useful for retirement planning when you're working from a spending target rather than a pot you already have.
What's the difference between an ordinary annuity and an annuity due?
Timing. An ordinary annuity pays at the end of each period (the standard convention); an annuity due pays at the start. Because due payments arrive earlier, each one is worth more in present-value terms — so the same premium supports a slightly smaller payment: PMT_due = PMT_ordinary ÷ (1 + i). Flip the timing toggle to compare; the gap is one period's interest.
What does the annual payout increase (COLA) do?
A level payment loses buying power every year — at 3% inflation, $1,650/month is worth about $910 in today's terms after 20 years. Setting a COLA makes the income start lower but grow by that percentage each year, using the growing-annuity formula PV = PMT · (1 − ((1+g)/(1+i))^n) / (i − g). The line under the headline shows the year-1 vs final-year income so you can see the trade: less now, more later, same premium.
How is this different from a lifetime annuity?
A lifetime (life) annuity pays until you die — you can't outlive it, which is its whole appeal, but if you die early the insurer keeps the unused balance. A fixed-period annuity (what this models) pays for a set term regardless. Real annuity products from insurers also bake in fees, mortality assumptions, and guarantees, so their quotes differ from this pure math.
Is annuity income taxable?
Usually, at least in part. How it's taxed depends on whether it was bought with pre-tax or after-tax money and the rules in your country. This calculator shows pre-tax income. For a real purchase, get a quote and tax guidance specific to your situation.