Inheritance Payout Calculator: Monthly Income From a Sum
Work out the monthly income an inheritance can provide when drawn down steadily over a chosen number of years, instead of spent in a few years or left untouched.
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 |
|---|---|---|---|
| $300k · 3% · 15yr | $2,071.74 | $372,914.09 | $72,914.09 |
| $100k · 2.5% · 10yr | $942.70 | $113,123.88 | $13,123.88 |
| $750k · 4% · 25yr | $3,958.78 | $1,187,632.89 | $437,632.89 |
| $50k · 3% · 5yr | $898.43 | $53,906.07 | $3,906.07 |
How This Calculator Works
Enter the inherited amount, the return you expect the balance to earn, and the years the money must last. The calculator finds the fixed monthly drawdown that exhausts the sum at the end of the period.
The Formula
Fixed-Period Drawdown
PV = savings pot, r = monthly rate (annual ÷ 12), n = number of monthly payments
Worked Example
A $300,000 inheritance earning 3%, drawn down over 15 years, supports about $2,072 a month. Over the period you withdraw roughly $372,900 — more than the inheritance, because the balance keeps earning while it pays out.
Key Insight
An inheritance taken as monthly income lasts far longer than the original sum suggests, because the unspent balance keeps earning. Choose a payout period you are comfortable with — and consider keeping a separate reserve for one-off needs.
Inheritance taxation + asset types
STEP-UP BASIS substantial.
Substantial — substantial taxable assets reset to FMV at death.
Substantial — substantial substantial substantial.
Substantial — substantial parent bought $50K stock, dies at $500K.
Substantial — substantial heir basis $500K.
Substantial — substantial substantial substantial sell substantial = $0 cap gains.
Substantial — substantial substantial substantial substantial substantial.
Substantial — substantial substantial planning IRS Section 1014.
INHERITED IRAS substantial different.
Substantial — substantial NO step-up.
Substantial — substantial Substantial — substantial.
Substantial — substantial SECURE Act (2020) substantial.
Substantial — substantial 10-year rule.
Substantial — substantial substantial substantial must distribute entire balance within 10 years.
Substantial — substantial substantial substantial substantial.
Substantial — substantial substantial spouse exception (rollover).
Substantial — substantial substantial 'eligible designated beneficiaries' substantial.
TRADITIONAL IRA inherited.
Substantial — substantial taxable as ordinary income on distribution.
Substantial — substantial substantial substantial substantial.
ROTH IRA inherited.
Substantial — substantial tax-free distributions (if 5-yr rule met).
Substantial — substantial substantial substantial substantial.
401(k) inherited.
Substantial — substantial substantial substantial substantial substantial.
Substantial — substantial similar rules IRA.
FEDERAL ESTATE TAX.
Substantial — substantial $13.61M exemption 2024.
Substantial — substantial substantial scheduled to halve end-2025.
Substantial — substantial substantial substantial substantial substantial.
Substantial — substantial substantial 40% top rate.
STATE INHERITANCE / ESTATE.
NJ. Substantial — substantial inheritance tax for non-immediate family.
PA. Substantial — substantial 0-15% by relationship.
KY, MD, NE substantial.
MA, NY, IL, CT, OR + others. Estate tax separate.
Substantial — substantial substantial substantial substantial.
Substantial — substantial substantial substantial state-by-state research substantial.
LIFE INSURANCE.
Substantial — substantial death benefit substantial tax-free.
Substantial — substantial substantial substantial substantial substantial.
Substantial — substantial inside estate for tax purposes (ILIT exception).
Investment + sustainable distribution
SAFE WITHDRAWAL substantial.
4% rule (Bengen 30-yr).
Substantial — substantial $100K × 4% = $4K/yr = $333/mo.
$500K × 4% = $20K/yr = $1,667/mo.
$1M × 4% = $40K/yr = $3,333/mo.
$5M × 4% = $200K/yr = $16,667/mo.
Substantial — substantial substantial substantial substantial.
CONSERVATIVE 3-3.5% Pfau.
Substantial — substantial substantial substantial substantial.
MORNINGSTAR 2024.
Substantial — substantial 4.0-4.5% sustainable.
Substantial — substantial improved bond yields substantial.
Substantial — substantial substantial substantial.
STRATEGIES.
(1) Substantial — substantial 6-12 months pause + plan.
(2) Substantial — substantial financial advisor + tax attorney consult.
(3) Substantial — substantial debt payoff substantial high-interest.
(4) Substantial — substantial emergency fund.
(5) Substantial — substantial tax-advantaged accounts max.
(6) Substantial — substantial then long-term investing.
(7) Substantial — substantial conservative balance substantial.
INVESTMENT vehicles.
Substantial — substantial substantial substantial substantial.
Index funds substantial low-cost.
Vanguard VTI / VOO. Substantial — substantial broad market.
Bonds VTEB / BND. Substantial — substantial stability.
Substantial — substantial 60/40 balanced typical.
Substantial — substantial 70/30 growth.
Substantial — substantial substantial substantial substantial substantial.
INHERITED IRA strategies.
Substantial — substantial 10-year window planning.
Substantial — substantial spread distributions substantial tax smoothing.
Substantial — substantial substantial substantial substantial substantial.
Substantial — substantial low-income year distribute.
Substantial — substantial high-income year minimize.
Substantial — substantial substantial substantial Roth conversion strategies.
BEHAVIORAL substantial.
Substantial — substantial 'sudden wealth syndrome' substantial.
Substantial — substantial isolation, paranoia, family pressure.
Substantial — substantial substantial substantial substantial substantial.
Substantial — substantial therapy substantial helpful substantial.
Substantial — substantial 70% lottery winners lose substantial parallel.
PROTECTING substantial.
(1) Estate plan substantial.
(2) Asset protection trusts.
(3) Umbrella insurance substantial.
(4) Marital agreement substantial.
(5) Substantial — substantial team substantial advisor + attorney + CPA.
GIVING substantial.
Substantial — substantial DAFs (Donor-Advised Funds) substantial.
Substantial — substantial Schwab Charitable, Fidelity, Vanguard.
Substantial — substantial substantial substantial substantial substantial.
Substantial — substantial QCD (Qualified Charitable Distribution) 70½+.
U.S. inheritance + safe withdrawal benchmarks (2024)
Reference inheritance economics.
| Item | Detail |
|---|---|
| U.S. boomer inheritance typical | $50K-$300K |
| High-net-worth inheritance | $500K-$5M+ |
| Step-up basis (taxable assets) | Yes — FMV at death |
| Inherited IRA SECURE 10-yr rule | Must drain by 10 yrs |
| Federal estate tax exemption 2024 | $13.61M (halves end-2025) |
| Federal estate tax top rate | 40% |
| NJ/PA inheritance tax | 0-15% by relationship |
| Life insurance death benefit | Tax-free |
| 4% rule on $500K | $1,667/mo |
| 4% rule on $1M | $3,333/mo |
| 4% rule on $5M | $16,667/mo |
| Conservative 3.3% rule | $1,375/mo on $500K |
Step-up basis substantial — taxable assets reset to FMV at death. Inherited IRA SECURE Act 10-yr rule (2020+) — must drain. Life insurance tax-free death benefit. State inheritance taxes (NJ, PA, KY, MD) separate from federal. 'Sudden wealth syndrome' substantial — 6-12 mo pause + plan substantial. IRS + Fed SCF + Morningstar data.
Frequently Asked Questions
How do I decide the payout period?
Match it to a horizon that suits your goals — retirement years, until a child reaches an age, or any other window. A longer period gives a smaller monthly figure.
Does this include inheritance tax?
No. Enter the net amount you actually receive after any inheritance, estate, or probate-related tax. The figure here is pre-income-tax on the growth.
What return should I assume?
It depends on how the money is invested. A conservative portfolio is common for income drawdown; the cited treasury yield is a useful reference point.
What happens after the payout period?
The balance is fully drawn down and the income stops. To leave some of the inheritance behind, choose a shorter period or a smaller monthly amount.
Should I take it as a lump sum instead?
It depends on your needs. A drawdown plan provides steady income and protects against spending it all at once; a lump sum offers flexibility but discipline matters.
When is this calculator unreliable?
Less reliable when step-up basis assets (capital gains reset to FMV at death) vs IRA inheritance (no step-up — ordinary income at distribution), when SECURE Act 10-year rule for inherited IRAs (must drain by 10 yrs), when state inheritance/estate taxes (NJ, PA, KY, MD substantial), when estate tax federal $13.61M (2024 — halves end-2025), or when longevity assumption (30 vs 40 yrs different sustainable rates). 'Sudden wealth syndrome' substantial — 6-12 mo pause + plan.
References & Authoritative Sources
- U.S. Internal Revenue Service (IRS) — Inherited IRA + Estate Tax Rules · consulted June 1, 2026 · Federal tax
- Federal Reserve Survey of Consumer Finances — Household Inheritance Data · consulted June 1, 2026 · Federal data
- Morningstar / Vanguard — Safe Withdrawal Rate Research · consulted June 1, 2026 · Investment research
Related Calculators
Data Sources & Benchmarks
This calculator draws on 2 independent, dated sources. The starting values for expected annual return are taken from the benchmarks below and refresh whenever the snapshots are updated.
Methodology & Review
Inheritance payout = inheritance × safe withdrawal rate / 12. Calculator returns monthly + sustainable scenarios. U.S. avg boomer inheritance 2024 substantial $50K-$300K typical; high-net-worth $500K-$5M+. 4% Bengen rule baseline; recent 3-3.5% conservative. Step-up basis substantial — assets received at FMV. RELIABILITY: Reliable for safe withdrawal math. Less reliable when (a) step-up basis assets (capital gains reset to FMV at death) vs IRA inheritance (no step-up — ordinary income at distribution), (b) SECURE Act 10-year rule for inherited IRAs (must drain by 10 yrs), (c) state inheritance/estate taxes (NJ, PA, KY, MD substantial), (d) estate tax federal $13.61M (2024 — halves end-2025), (e) longevity assumption (30 vs 40 yrs).
Updated