How to use the annuity calculator
- 1 Choose payout (income from a lump sum) or growth (value of regular contributions).
- 2 Enter the starting amount, and a monthly contribution for growth.
- 3 Enter the yearly interest rate and the number of years.
- 4 Choose whether payments are at the end or start of each month and read the result.
Worked example
$300,000 paid out monthly over 25 years at 5%, paid at the end of each month. The calculator gives $1,753.77 a month ($21,045 a year). Over 300 payments that is $526,131 in total, so $226,131 comes from interest. That is about $585 a month for each $100,000.
Planning annuity income
- Compare quotes per $100,000 of premium.
- Check fees and surrender charges before buying.
- Plan for inflation: level payments lose buying power.
- Keep some savings liquid for emergencies.
See total savings with the Retirement Calculator, growth with the Compound Interest Calculator, and benefits with the Social Security Calculator.
Features
Two modes
Monthly income from a lump sum, or the future value of contributions.
Annuity due option
Payments at the start of each month, as many annuities pay.
Income per $100,000
An easy way to compare annuity quotes.
When to use it
Retirement income
See how long savings last at a set income. Check your total savings with the Retirement Calculator.
Comparing annuity quotes
Check the rate behind an insurer's monthly payout.
Regular saving
See what monthly deposits grow to. Compare with the Compound Interest Calculator.
Lump sums
Plan income from a pension lump sum or an inheritance. Add Social Security from the Social Security Calculator.
Related Savings and Investing tasks
Frequently asked questions
What is an annuity?
A series of equal payments made at regular intervals. In finance it also means an insurance contract that turns a lump sum into regular income, for a set period or for life.
How much income will $300,000 give?
At 5% over 25 years, $300,000 pays about $1,753.77 a month, then runs out. Over 30 years at the same rate it would pay about $1,610 a month.
What is the difference between an ordinary annuity and an annuity due?
An ordinary annuity pays at the end of each period; an annuity due pays at the start. Payments at the start are slightly smaller for the same lump sum, because the money has less time to earn interest.
Is this the same as a life annuity?
Not exactly. This calculator uses a fixed number of years. A life annuity pays as long as you live, and insurers price it using life expectancy, so quotes differ by age and sex.
What interest rate should I use?
For an insurance quote, the rate implied by the quote. For your own drawdown plan, a cautious expected return, for example 4% to 5% for a balanced portfolio.
What is the future value of an annuity?
What a series of regular payments grows to with interest. $300,000 plus $500 a month at 5% for 25 years grows to about $1.33 million.
Are annuity payments taxed?
Payments from an annuity bought with after-tax money are partly a tax-free return of your premium. Payments from a traditional IRA or 401(k) are fully taxable as income.
What are the downsides of insurance annuities?
Fees can be high, money can be locked in with surrender charges, and fixed payments lose buying power to inflation unless you buy an inflation-adjusted option.
What is the 4% rule?
A guideline that withdrawing 4% of savings in the first year, then adjusting for inflation, has historically lasted about 30 years. This calculator instead uses up the balance exactly over the years you choose.
Does this include inflation?
No. The payments are level. To plan in today's dollars, use a lower real rate, for example the expected return minus inflation.
Results are estimates based on the official rates linked above. Confirm important figures with the issuing authority or a qualified adviser before you act on them.
Built and reviewed by Hamza Farooq, founder and lead developer
· Last updated
· How we check our tools
· Report a problem