Annuity Calculator
Payout and value of a fixed annuity.
Reviewed by the Calculation Machine team · Updated 24 October 2026 · How we check our maths
Your values
ⓘ Live results
- Monthly income in payout phase
- $1,356.32
- Value at start of payout
- $205,516.83
- Total contributed
- $120,000.00
- Growth earned
- $85,516.83
- Total income received
- $325,516.83
Quick answer
An annuity calculation has two phases. In the accumulation phase, the future value of equal monthly deposits is PMT × ((1 + r)ⁿ − 1) ÷ r. In the payout phase, that balance is turned into equal monthly payments over a set period. Saving $500 a month for 20 years at 5% builds about $205,500, which pays about $1,356 a month for 20 years.
What the Annuity calculator does
This calculator models a fixed-rate, period-certain annuity: you contribute a set amount each month for a number of years, the balance grows at a constant rate, and it is then paid back to you in equal monthly installments until it runs out. It shows the balance at the start of payouts, your total contributions, the growth earned, the monthly income and the total income received.
The same arithmetic applies to a fixed deferred annuity bought from an insurer, a do-it-yourself plan of saving and then drawing down an investment account, or a structured settlement. For a plan with an existing lump sum, see the present value calculator or the pension calculator.
The model uses one rate for both phases and assumes no fees, taxes or inflation. Commercial annuities usually carry fees and surrender charges, and a life annuity pays for as long as you live rather than for a fixed period — insurers price those using mortality tables, which this tool does not.
The formula
Accumulation: FV = PMT × ((1 + r)ⁿ − 1) ÷ r Payout: Income = FV × r ÷ (1 − (1 + r)^−m)
| Symbol | Meaning | Unit |
|---|---|---|
| PMT | Monthly contribution, made at the end of each month | $ |
| r | Annual return ÷ 12 | per month |
| n | Number of monthly contributions (years contributing × 12) | months |
| m | Number of monthly payouts (payout years × 12) | months |
| FV | Balance when payouts begin | $ |
Both formulas are the standard ordinary-annuity equations found in any time-value-of-money text. Payments at the start of each month (an annuity due) would give slightly higher values — multiply FV by (1 + r). The payout continues to earn the same rate on the remaining balance, and the balance reaches zero at the end of the payout period.
Worked examples
Saving for 20 years, drawing for 20
A 45-year-old puts $500 a month into a fixed account at 5% until 65, then draws it down evenly to 85.
Inputs
- Monthly contribution500 $
- Annual return5 %
- Years contributing20
- Payout years20
Result
- Monthly income in payout phase$1,356.32
- Value at start of payout$205,516.83
- Total contributed$120,000.00
- Growth earned$85,516.83
- Total income received$325,516.83
The balance reaches about $205,500 and pays $1,356 a month for 20 years. Total income of about $325,500 is 2.7 times the $120,000 contributed, because the money keeps earning interest during payouts.
Same savings, 30-year payout
The same $500 a month for 20 years at 5%, but spread over 30 years of retirement to guard against a long life.
Inputs
- Monthly contribution500 $
- Annual return5 %
- Years contributing20
- Payout years30
Result
- Monthly income in payout phase$1,103.26
- Value at start of payout$205,516.83
- Total contributed$120,000.00
- Growth earned$85,516.83
- Total income received$397,173.17
Monthly income falls to about $1,103, roughly 19% less, but lasts 10 years longer. Choosing the payout period is a trade-off between income now and the risk of running out.
Larger contributions over 25 years
A saver putting away $1,000 a month for 25 years at 6%, then taking income for 25 years.
Inputs
- Monthly contribution1000 $
- Annual return6 %
- Years contributing25
- Payout years25
Result
- Monthly income in payout phase$4,464.97
- Value at start of payout$692,993.96
- Total contributed$300,000.00
- Growth earned$392,993.96
- Total income received$1,339,490.94
The balance grows to about $693,000 and supports about $4,465 a month. At 6% held steady for 50 years this is optimistic; test a lower rate to see a more cautious range.
Types of annuity and how this model fits
The calculator matches a fixed, period-certain structure. Other types behave differently.
| Type | How returns work | How long it pays |
|---|---|---|
| Fixed annuity | Guaranteed rate set by the insurer | Period certain or for life |
| Variable annuity | Depends on chosen investment subaccounts | Period certain or for life |
| Fixed indexed annuity | Linked to a market index with caps and floors | Period certain or for life |
| Immediate annuity (SPIA) | Lump sum converted to income straight away | Usually for life |
| Period-certain annuity | Fixed rate | Set number of years, then stops (this calculator) |
Contribution timing and the payout rate
Small modeling choices change the result:
- Start-of-month payments (annuity due) add one month of interest to every deposit, raising the balance by a factor of (1 + r) — about 0.4% at 5%.
- The payout rate often differs from the growth rate in practice. If you move to safer investments at retirement, rerun the payout with a lower rate.
- Inflation erodes a fixed payment. At 3% inflation, $1,356 a month buys about half as much after 24 years. Some annuities offer rising payments at the cost of a lower starting amount.
Questions to ask before buying an annuity
- What are the annual fees, including mortality and expense charges and rider costs?
- How long is the surrender period, and what is the charge for withdrawing early?
- Is the income guaranteed for life, for a set period, or both (life with period certain)?
- What happens to remaining money when you die — does a beneficiary receive anything?
- What is the insurer's financial strength rating? Annuity guarantees depend on the insurer's ability to pay, backed by state guaranty associations up to set limits.
Comparing a quote against the payout this calculator gives for the same lump sum and rate shows how much the guarantees and fees cost. A fee-only financial adviser can help weigh the trade-offs.
How to use the Annuity Calculator
- 1Enter the amount you will contribute each month.
- 2Enter an expected annual return — use the guaranteed rate for a fixed annuity, or a cautious long-run figure for investments.
- 3Enter the number of years you will contribute, then the number of years you want the income to last.
- 4Read the balance at the start of payouts and the monthly income; try a longer payout period to see the trade-off.
Frequently asked questions
How much does a $100,000 annuity pay per month?
At 5% over 20 years, a $100,000 period-certain payout is about $660 a month. A lifetime annuity from an insurer depends on your age, sex and current rates, so get quotes.
What is the difference between an ordinary annuity and an annuity due?
An ordinary annuity makes payments at the end of each period; an annuity due makes them at the start. The annuity due is worth slightly more because each payment earns one extra period of interest.
Are annuity payments taxable?
In the US, the earnings portion of each payment is taxed as ordinary income; the return of your own after-tax money is not. Annuities held inside an IRA or 401(k) are fully taxable on withdrawal.
What happens if I outlive a period-certain annuity?
Payments stop at the end of the period. A life annuity, or a life annuity with a period-certain guarantee, avoids that risk.
Is an annuity better than investing myself?
Self-investing usually has lower fees and more flexibility; an annuity can guarantee income for life. Many retirees use an annuity to cover essential expenses and keep the rest invested.
References
- Annuities (Investor.gov) — US Securities and Exchange Commission
- Annuities: Buyer's Guide — National Association of Insurance Commissioners (NAIC)
- Publication 575, Pension and Annuity Income — Internal Revenue Service
About this calculator
- Built and reviewed by the Calculation Machine team · How we build and test calculators
- Last reviewed: October 24, 2026
- Report an error