💰 Financial
Annuity Payout Calculator
Calculate how much fixed income you can withdraw from a lump sum over a specific period, or determine how long your money will last at a specific withdrawal rate.
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Formula
PMT = PV × [r / (1 - (1+r)^-n)]PMT- Periodic payout amount
PV- Present Value (initial lump sum)
r- Interest rate per period
n- Total number of payout periods
Example
Retirement Income Payout
You retire with $500,000 earning a conservative 4% annually. You want to drain the account evenly over 25 years.
- Identify parameters: PV = $500,000, Annual Rate = 4%, Term = 25 years.
- Convert to monthly values: r = 0.04 / 12 = 0.00333, n = 300 months.
- Apply the payout formula.
- Result: You can withdraw $2,639.18 every month for 25 years before the balance hits zero.
Frequently Asked Questions
No, this calculates a fixed nominal payout. In reality, $2,600 a month will buy much less in year 20 than in year 1. If you need inflation-adjusted income, you must start with a lower initial withdrawal.