Annuity Payout Calculator
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Payout Details
Monthly Payout
Enter your payout details to calculate your monthly income.
This calculator models a fixed, guaranteed-term insurance annuity payout. For a self-managed, uncertain-duration portfolio drawdown, see our Retirement Calculator. This is an educational estimate only and is not financial advice.
Understanding Annuity Payouts
Once an annuity's accumulation phase ends (see our Annuity Calculator), an insurance company can convert the balance into a fixed monthly payment for a fixed, guaranteed term. This is mathematically identical to a loan's level-payment formula run in reverse: the balance is "paid down" to zero by the payout schedule, just like a loan balance is paid down by loan payments.
Guaranteed, Not Estimated
An insurance annuity converts uncertainty into a guaranteed payment for a guaranteed term -- the insurer, not you, absorbs the risk that the underlying assets underperform during the payout period.
A Known, Fixed Term
You choose the payout period up front, and the payment is sized to exactly exhaust the balance (plus credited interest) by the end of that term -- no more, no less.
Contrast With Self-Managed Drawdown
A self-managed retirement portfolio (see our Retirement Calculator) doesn't guarantee either the payment or how long the money lasts -- both depend on actual market returns. An insurance annuity trades that flexibility for certainty.
Same Math as a Loan
The level-payment formula that sizes your monthly payout is the exact same formula that sizes a loan's monthly payment -- just run against a balance that's paying you, instead of one you owe.
Worked Example
Suppose you annuitize a $300,000 balance at a 5% annual rate for a 20-year fixed payout period:
- Monthly payout: approximately $1,979.87.
- Total paid out over 20 years: approximately $475,168.13.
- Total growth during payout: approximately $175,168.13 -- more than half of what you started with, paid out on top of the original balance.
Where the Payout Comes From
- Starting Balance: $300,000.00
- Growth During Payout: $175,168.13
- Total Paid Out: $475,168.13
Key Takeaways
- Guaranteed Payment, Guaranteed Term: This calculator models an insurance-style annuity that fixes both the payment and how long it lasts.
- Not the Same as a Portfolio Drawdown: A self-managed retirement portfolio guarantees neither payment size nor duration -- see our Retirement Calculator for that scenario.
- Longer Terms Lower the Payment: Stretching the same balance over more years reduces the monthly payout, just like a longer loan term reduces a monthly payment.
- This Is an Estimate: Real insurance annuity contracts include fees, surrender charges, and insurer-specific terms not modeled here -- review the actual contract before purchasing.