About the Annuity Calculator
This annuity calculator converts a lump sum into a stream of equal payments for a fixed number of years — the math behind period-certain income annuities, structured payouts and drawing down a savings pot. Enter the premium, the interest rate, how long payments last and how often they arrive, and it returns the payment per period, total income and how much of it is interest.
It also works in reverse: enter the monthly income you want and it calculates the premium you would need to fund it. An optional deferral period lets the premium grow before payouts start, which models a deferred annuity.
Real annuity quotes from insurers also depend on age, sex, fees, riders and whether payments last for life, so treat this as a benchmark for comparing quotes rather than an offer. Payments are level (no inflation adjustment) and interest compounds at the payment frequency.
With the default inputs, the payment per period is $1,649.89. Change any value above to recalculate instantly.
How to use the annuity calculator
- 1Enter the lump sum you would invest in the annuity.
- 2Enter the interest rate credited and how many years payments should last.
- 3Choose monthly, quarterly, semi-annual or annual payments.
- 4Add a deferral period if payouts start later, and tick annuity due for payments at the start of each period.
- 5Enter a target monthly income to see the premium that would fund it.
Formula and method
The payment comes from the present value of an ordinary annuity: a level payment PMT made n times at periodic rate i has a present value of PMT × (1 − (1 + i)^−n) ÷ i. Solving for PMT with the premium as the present value gives the payout. For an annuity due, where each payment is made at the start of the period, the payment is divided by (1 + i).
If there is a deferral period, the premium first grows for d years at the same rate. The premium needed for a target income runs the formula backwards: it discounts the stream of target payments to the payout start date and then back over the deferral period.
- P
- Premium (lump sum paid today)
- V
- Value when payouts begin
- i
- Periodic rate (annual rate ÷ payments per year)
- n
- Number of payments (years × frequency)
- f
- Payments per year
- d
- Deferral years
Worked examples
$250,000 at 5% for 20 years, monthly
A monthly rate of 5% ÷ 12 over 240 payments turns $250,000 into about $1,649.89 a month, or $395,973 in total. Funding $1,500 a month on the same terms would need a premium of about $227,288.
$100,000 deferred 10 years, then 15 years of annual payments at 4%
Growing at 4% for 10 years, $100,000 becomes $148,024. Paid out over 15 annual installments at 4%, that supports about $13,313 a year.
Zero interest check
With no interest, $120,000 spread over 120 monthly payments is exactly $1,000 a month, and the premium for $1,000 a month is the same $120,000.
Frequently asked questions
How much does a $100,000 annuity pay per month?+
It depends on the rate and term. At 5% over 20 years, $100,000 pays about $660 a month. Lifetime annuities quoted by insurers vary with your age at purchase — older buyers receive more because payments are expected to last fewer years.
What is the difference between an ordinary annuity and an annuity due?+
An ordinary annuity pays at the end of each period, while an annuity due pays at the start. Because an annuity due pays sooner, each payment is slightly smaller for the same premium.
What is a deferred annuity?+
A deferred annuity lets your premium grow for a number of years before income begins. Use the “years before payouts start” input to model the accumulation period.
Are annuity payments taxable?+
For a non-qualified annuity bought with after-tax money, part of each payment is a tax-free return of principal and the rest is taxable interest. Annuities held inside an IRA or 401(k) are generally fully taxable when paid out.
Does this include life-contingent annuities?+
No. This models a period-certain payout. Lifetime annuities pool mortality risk, so insurers’ quotes can be higher than this formula suggests for older buyers and lower for younger ones.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.