Annuity Calculator
Calculate monthly retirement income from a lump sum, or build toward your annuity goal
An annuity converts a lump sum into a stream of guaranteed income payments over a fixed period or for life. This calculator works in two modes: Payout mode shows how much monthly income a lump sum generates (e.g., how much does $500,000 pay per month for 20 years at 5.5%), and Accumulate mode shows how much you need to save monthly to reach a target nest egg — using 2026 fixed annuity rate benchmarks of 4.5%–6.5%.
Annuity Payment Formula
Both annuity modes use the standard present value / future value of annuity formulas used by actuaries, insurance companies, and financial planners worldwide.
Payout Mode (PMT from PV):
Accumulate Mode (PMT to reach FV):
| Variable | Definition |
|---|---|
| PMT | Monthly payment amount |
| PV | Present value — the lump sum today |
| FV | Future value — the target accumulation goal |
| r | Monthly rate = Annual rate ÷ 12 |
| n | Total number of monthly payments (years × 12) |
Example: $500,000 at 5.5% over 20 years (240 months), r = 0.4583%/month → PMT = $500,000 × [0.004583 × (1.004583)²⁴⁰] ÷ [(1.004583)²⁴⁰ − 1] = $3,430/month.
💡 Expert Pro-Tip
The 4% rule and annuities answer the same question differently. The 4% rule says withdraw 4% of your portfolio annually (self-managed, market-dependent). A fixed annuity guarantees income regardless of market performance, but at the cost of liquidity and upside. A hybrid approach — annuitizing 40–60% of your retirement assets to cover essential expenses, and keeping the rest invested — gives you guaranteed income floor plus growth potential. Use this calculator to find what lump sum creates the income floor you need, then use the Retirement Calculator to size your total portfolio.
Annuity Calculator 2026
Payout Details
Results
| Year | Annual Payout | Balance |
|---|---|---|
| 1 | $41,273 | $485,874 |
| 2 | $41,273 | $470,952 |
| 3 | $41,273 | $455,187 |
| 4 | $41,273 | $438,534 |
| 5 | $41,273 | $420,941 |
| 6 | $41,273 | $402,355 |
| 7 | $41,273 | $382,722 |
| 8 | $41,273 | $361,980 |
| 9 | $41,273 | $340,069 |
| 10 | $41,273 | $316,922 |
| 11 | $41,273 | $292,469 |
| 12 | $41,273 | $266,637 |
| 13 | $41,273 | $239,348 |
| 14 | $41,273 | $210,519 |
| 15 | $41,273 | $180,064 |
| 16 | $41,273 | $147,892 |
| 17 | $41,273 | $113,904 |
| 18 | $41,273 | $77,999 |
| 19 | $41,273 | $40,069 |
| 20 | $41,273 | $0 |
Based on your results — what to do next:
Will this annuity fund your retirement?
Your $3,439.44/mo annuity payout — check if that covers your full retirement income need.
Compare annuity returns vs. market investing
Annuity pays $825,465 over 20 yrs. See if the same $500,000 grows more in the market.
Combine with Social Security benefits
Stack your annuity income with Social Security to build a complete retirement income floor.