Annuity Calculator
An annuity converts a lump sum into a stream of guaranteed income — for a set period or for life — and for some retirees that guarantee is worth paying for in exchange for peace of mind and protection against outliving their savings. A fixed annuity pays a predictable amount based on your principal, the payout rate the insurer offers, and the payout period you choose. This calculator estimates the monthly or annual payout of a fixed annuity, the total payout over the period, and the total interest earned, so you can see what a given lump sum would produce in income. Enter the annuity principal (the lump sum), the annual payout rate, the payout period in years, and the payout frequency (monthly or yearly), and the calculator returns the periodic payout, the total payout, and the total interest. The payout rate is set by the insurer based on your age, the period, prevailing interest rates, and the contract terms; higher rates mean larger payouts but may come with more conditions or less flexibility. Part of each annuity payment is taxed as ordinary income (the earnings portion) and part is a tax-free return of principal, depending on whether you used pre-tax or after-tax money to fund the annuity. What happens if you die early depends on the contract: some annuities have a guaranteed period that continues payments to your heirs, while life-only annuities stop at death, which is why life-only annuities pay the most per month — the insurer keeps the principal if you die early in exchange for paying more while you live. Annuities provide guaranteed income and longevity protection, but fees can be high, they limit growth and liquidity, and they're complex, so they suit people who value certainty over growth and who want to cover essential expenses with guaranteed income regardless of market performance. Use this calculator to compare annuity income against other retirement income sources, to see the income a lump sum produces, and to weigh the trade-offs of annuitizing part of your nest egg.
Annuity Calculator
Calculate the periodic payout of a fixed annuity over a set number of years.
Monthly payout
$1,649.89
Over 20 years
Total payout
$395,973
Total interest
$145,973
A fixed annuity pays a guaranteed stream of income for a set period or for life. This assumes a level payout; actual terms and fees vary by insurer and contract.
How to Use This Calculator
- 1Enter the annuity principal (lump sum).
- 2Enter the annual payout rate.
- 3Enter the payout period in years.
- 4Choose monthly or yearly payout frequency.
- 5Read the periodic payout and total payout.
Why It Helps
- ✓Estimates guaranteed income from a lump sum.
- ✓Compares monthly vs. yearly payouts.
- ✓Shows total payout and interest earned.
- ✓Helps plan retirement income streams.
About This Calculator
An annuity converts a lump sum into a stream of guaranteed income — for a set period or for life — and for some retirees that guarantee is worth paying for in exchange for peace of mind and protection against outliving their savings. A fixed annuity pays a predictable amount based on your principal, the payout rate the insurer offers, and the payout period you choose. This calculator estimates the monthly or annual payout of a fixed annuity, the total payout over the period, and the total interest earned, so you can see what a given lump sum would produce in income. Enter the annuity principal (the lump sum), the annual payout rate, the payout period in years, and the payout frequency (monthly or yearly), and the calculator returns the periodic payout, the total payout, and the total interest. The payout rate is set by the insurer based on your age, the period, prevailing interest rates, and the contract terms; higher rates mean larger payouts but may come with more conditions or less flexibility. Part of each annuity payment is taxed as ordinary income (the earnings portion) and part is a tax-free return of principal, depending on whether you used pre-tax or after-tax money to fund the annuity. What happens if you die early depends on the contract: some annuities have a guaranteed period that continues payments to your heirs, while life-only annuities stop at death, which is why life-only annuities pay the most per month — the insurer keeps the principal if you die early in exchange for paying more while you live. Annuities provide guaranteed income and longevity protection, but fees can be high, they limit growth and liquidity, and they're complex, so they suit people who value certainty over growth and who want to cover essential expenses with guaranteed income regardless of market performance. Use this calculator to compare annuity income against other retirement income sources, to see the income a lump sum produces, and to weigh the trade-offs of annuitizing part of your nest egg.
Disclaimer: This calculator provides estimates for educational purposes only and does not constitute financial, tax, or investment advice. Results depend on assumptions that may not reflect your actual situation.
Frequently Asked Questions
What is a fixed annuity?
A contract with an insurer that pays a guaranteed, predictable income stream for a set period or for life, in exchange for a lump sum.
How is the payout rate determined?
By the insurer based on your age, the period, interest rates, and the contract terms. Higher rates mean larger payouts but may carry more conditions.
Are annuity payouts taxed?
Part of each payment is taxed as ordinary income (the earnings) and part is tax-free return of principal, depending on whether you used pre-tax money.
What happens if I die early?
It depends on the contract. Some annuities have a guaranteed period paying heirs; others (life-only) stop at death. Choose a payout option that fits your needs.
Are annuities a good investment?
They provide guaranteed income and longevity protection, but fees can be high and they limit growth. They suit people who value certainty over growth.
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Written by
James MitchellSenior Financial Analyst & Personal Finance Expert
Certified Financial Planner (CFP) • MBA in Finance, University of Chicago Booth School of Business