Annuity Payout Calculator

Use this annuity payout calculator to estimate a payment amount, how long your money can last, or how much starting principal you need based on a starting balance, interest rate, payout schedule, and payment timing.

How to use our Annuity Payout Calculator

1. Choose Solve for: Payment amount, Time (how long money lasts), or Starting principal needed.
2. Enter your Starting principal (USD) (the balance you are paying from). If you are solving for starting principal, you can leave this alone and fill in the payment instead.
3. Enter the Annual interest/return rate (percent) as a yearly percent (example: 5 for 5%).
4. Pick a Payout frequency (monthly, quarterly, yearly, or custom).
5. Pick Payment timing: end of period (ordinary annuity) or beginning of period (annuity due).
6. Open Advanced options and enter the mode-specific input you need: Payout length (years) for payment/principal mode, or Payment amount (USD) for time/principal mode.
7. (Optional) In Advanced, set a Final balance goal (USD) if you do not want to spend the account down to zero.
8. (Optional) In Advanced, set Compounding frequency. Use this if interest is credited on a different schedule than your withdrawals.
9. If you choose Custom frequency, fill in Custom payouts per year and/or Custom compounds per year.
10. Click Calculate, then review the effective per-period rate, totals, and any notes or warnings for feasibility.

Definitions

Starting principal (present value, PV): The amount of money in the account at the start of withdrawals.

Payment per period (PMT): The amount you withdraw each payout period (for example, each month).

Annual interest/return rate: The yearly growth rate you assume for the balance during payouts. This calculator treats it as a fixed math rate, not a guaranteed quote.

Payout frequency: How often you take a payment (payments per year).

Compounding frequency: How often interest is added to the balance (compounds per year). It can be different from payout frequency.

Ordinary annuity (end of period): You earn interest for the period first, then withdraw at the end.

Annuity due (beginning of period): You withdraw at the beginning, then the remaining balance earns interest.

Final balance goal (future value, FV): The balance you want left at the end (often 0 if you want to fully deplete).

Insurance annuity vs. math payout stream: Insurance-company annuity payouts can depend on contract options and rules set by the insurer and state regulators, not just time-value-of-money math. See consumer overviews from state insurance regulators. [1][2][3]

Methodology

What this calculator is doing

This calculator models a payout stream from an account balance using standard time-value-of-money annuity math. It assumes a constant rate and a fixed schedule. Insurance annuity quotes may use additional factors and contract options described in state consumer materials. [1]

Step 1: Convert inputs into periods and a per-period rate

n = years * payouts_per_year

i_eff = (1 + r_nom / compounds_per_year)^(compounds_per_year / payouts_per_year) - 1

Here, r_nom is the annual rate as a decimal (annual_rate_percent / 100). If compounding frequency is set to the same as payout frequency, then compounds_per_year = payouts_per_year. If the annual rate is 0, then i_eff = 0.

Step 2: Apply the correct annuity equation for the chosen mode

A) Solve for payment amount (end of period, ordinary annuity):

PMT = (PV * i_eff - FV * i_eff / (1 + i_eff)^n) / (1 - (1 + i_eff)^(-n))

If i_eff = 0, the payment is simple division.

PMT = (PV - FV) / n

B) Payment timing adjustment (beginning of period, annuity due):

PMT_due = PMT_ordinary / (1 + i_eff)

C) Solve for required starting principal (PV) for a target payment:

PV = PMT * (1 - (1 + i_eff)^(-n)) / i_eff + FV / (1 + i_eff)^n

If payment timing is beginning of period, first convert your entered payment to an ordinary-equivalent payment:

PMT_ordinary = PMT_due * (1 + i_eff), then use the PV formula. If i_eff = 0:

PV = PMT * n + FV

D) Solve for how long the money lasts (number of periods):

n = ln((PMT - FV*i_eff) / (PMT - PV*i_eff)) / ln(1 + i_eff)

If payment timing is beginning of period, use PMT_ordinary = PMT_due * (1 + i_eff) in the formula. If i_eff = 0:

n = (PV - FV) / PMT

Feasibility checks and N/A cases

When solving for time with i_eff > 0, some inputs do not produce a finite positive answer. Example:

if the payment is less than or equal to the interest earned per period on the current balance (PMT <= PV*i_eff) and your final balance goal is 0, the balance will not reach 0 under this constant-rate model. In those cases, the calculator shows time as N/A and explains what to change (raise the payment, lower the rate, shorten the goal, or set a higher final balance goal).

If i_eff is negative, the logarithm formula can also become invalid (log of a non-positive number). The calculator will show N/A if the log inputs are not valid, and it will add a note because negative returns can make results counterintuitive.

Totals shown in results

total_paid_out = PMT * n

total_interest_earned = total_paid_out - (PV - FV)

Total interest can be negative if withdrawals are large enough that the balance falls faster than it grows.

Sources