Annuity Payout Calculator: Monthly Income From an Annuity
Work out the monthly payout from a fixed-period annuity — the steady income an annuity pays until its term ends.
Adjust the inputs and select Calculate for a full breakdown.
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Monthly income | Total drawn | Growth while drawing |
|---|---|---|---|
| $250k · 4% · 20yr | $1,514.95 | $363,588.20 | $113,588.20 |
| $100k · 3.5% · 15yr | $714.88 | $128,678.86 | $28,678.86 |
| $500k · 5% · 25yr | $2,922.95 | $876,885.06 | $376,885.06 |
| $150k · 4.5% · 10yr | $1,554.58 | $186,549.14 | $36,549.14 |
How This Calculator Works
Enter the amount used to buy the annuity, the rate it credits, and the payout term. The calculator finds the fixed monthly payout that exhausts the annuity exactly at the end of the term, while the balance keeps earning the rate.
The Formula
Fixed-Period Drawdown
PV = savings pot, r = monthly rate (annual ÷ 12), n = number of monthly payments
Worked Example
A $250,000 annuity crediting 4% over a 20-year term pays about $1,515 a month. Across the term the payouts total roughly $363,600 — more than the purchase amount, because the balance earns as it pays out.
Key Insight
This models a period-certain annuity, which pays for a set number of years. A lifetime annuity instead pays until death and prices in longevity, so its monthly figure is set differently from the calculation here.
Immediate vs deferred annuities: when each makes sense
IMMEDIATE ANNUITY (SPIA — Single Premium Immediate Annuity): pay a lump sum now, payments start within 12 months and continue for life (or chosen term). 2026 rates for a 65-year-old: roughly 7-8% annual payout rate on premium for life-only payout. $200,000 SPIA → ~$15,000/year for life.
DEFERRED ANNUITY: pay premium now, payments don't start until a future date you choose (age 75, 80, or whenever). Allows tax-deferred growth before payouts begin. Used either as long-term retirement saving (deferred fixed annuity) or longevity insurance (deferred income annuity / DIA, also called QLAC inside qualified accounts).
Use cases: SPIA at retirement is the classic 'pension-like' choice for retirees wanting guaranteed lifetime income — converting savings into a paycheck. DIA/QLAC at age 65 for payments at 80+ is 'longevity insurance' — protects against outliving savings without giving up control of most of the portfolio. Both reduce sequence-of-returns risk by converting some assets to guaranteed income.
Lifetime vs period certain: the longevity insurance trade-off
Payout options dramatically affect both the payment amount and what happens at your death. LIFE-ONLY (highest payment): paid as long as you live. If you die year 1, the insurance company keeps the remaining premium. If you live to 100, you win big. Highest payment because no death benefit.
LIFE WITH PERIOD CERTAIN (e.g., 10-year or 20-year certain): paid for life OR for the certain period — whichever is longer. If you die in year 5 of a 10-year certain, beneficiaries get years 6-10. Payment is 5-15% lower than life-only.
JOINT AND SURVIVOR: paid as long as EITHER you or your spouse is alive. Common with 100%, 75%, or 50% to survivor — reducing the survivor payment proportionally. Payments lower than single life (insurance company faces longer expected payout period) but provides spouse protection. Reasonable choice for married couples. CASH REFUND OR INSTALLMENT REFUND: payments continue until cumulative payouts equal premium. After that, life-only. Provides death benefit but lowers payments most.
The fees problem: variable and indexed annuities
Fixed and immediate annuities (SPIAs) have simple, transparent structures — payments are guaranteed. VARIABLE ANNUITIES (VAs) and FIXED INDEXED ANNUITIES (FIAs) are different beasts with significant fees and complexity.
Variable annuity typical costs: mortality and expense (M&E) charge 1.0-1.5%/year + administration 0.15-0.25% + investment management 0.6-1.5% + optional riders 0.5-1.5%. Total: 2.3-4.7%/year of asset value. Compare to a low-cost index fund at 0.05% — a 2.5-4.5% annual fee drag that compounds against returns.
Worked example: $200,000 in variable annuity at 3% fees compared to $200,000 in index fund at 0.05% fees, both earning 7% gross over 25 years. Index fund grows to ~$1,080,000. VA grows to ~$540,000 — HALF as much, due to fees. The 'lifetime income rider' on VAs is the supposed compensation for fees, but the same income can usually be replicated more cheaply via SPIA when needed.
Annuity payout rates by age and structure (2026 estimates)
Approximate annual payout as % of premium for $200,000 SPIA. Rates vary by insurer, state, current interest rates. Higher ages get higher rates because shorter expected payout period.
| Age at start | Single life | Single life + 10-yr certain | Joint (100% to survivor) |
|---|---|---|---|
| 55 | 5.5% | 5.3% | 4.8% |
| 60 | 6.2% | 5.9% | 5.4% |
| 65 | 7.3% | 6.9% | 6.2% |
| 70 | 8.5% | 7.9% | 7.2% |
| 75 | 10.0% | 9.0% | 8.4% |
On $200k premium: 65-year-old life-only ~$14,600/year, joint ~$12,400/year — for life. Reductions for period-certain and joint reflect lower insurer risk. Compare to 4% safe withdrawal from same $200k = $8k/year (much lower but you keep the principal). Annuities trade flexibility for guaranteed income.
Frequently Asked Questions
What is a period-certain annuity?
It is an annuity that pays a fixed income for a set number of years and then stops. This calculator models that type, not a lifetime annuity.
How does it differ from a lifetime annuity?
A lifetime annuity pays until death, with the amount based on life expectancy. A period-certain annuity pays for a fixed term regardless of how long the holder lives.
What rate should I enter?
Use the rate the annuity contract credits. Fixed annuities state a rate; for an estimate, a rate near medium-term government yields is a reasonable starting point.
Why does total payout exceed the purchase amount?
The annuity's balance keeps earning the rate while it pays out, so the payments add up to more than the lump sum originally used to buy it.
Are annuity payouts taxed?
Often partly. The portion representing earnings is generally taxable, while the return of your original principal may not be. Tax treatment depends on the annuity type.
References & Authoritative Sources
- NAIC — National Association of Insurance Commissioners — Annuity buyer's guide · consulted May 31, 2026 · Insurance regulatory body — consumer guide on annuity types and disclosures
- FINRA — Financial Industry Regulatory Authority — Annuity fees and consumer warnings · consulted May 31, 2026 · Self-regulatory organization — annuity fee disclosure, complaint patterns
- SEC — Securities and Exchange Commission — Variable annuity prospectus requirements · consulted May 31, 2026 · Securities regulator — disclosure rules for variable annuities (treated as securities)
Related Calculators
Data Sources & Benchmarks
This calculator draws on 2 independent, dated sources. The starting values for annuity rate are taken from the benchmarks below and refresh whenever the snapshots are updated.
Methodology & Review
The monthly payout is the fixed amount that exhausts the annuity over the chosen term, with the balance earning a steady rate. It models a period-certain annuity, not a lifetime annuity.
Updated