How This Calculator Works
Start with your balance, the return rate you expect it to keep earning during the payout phase, and how often you want to be paid. Then pick a tab: Fixed Length asks how many years you want the money to last and solves for the payout amount; Fixed Payment flips it around — you choose the payment, and it solves for how long that payment can continue, effectively working as an annuity duration calculator for anyone who already knows the income they want and just needs to know how long it will hold up. Either way, the balance is drawn down to exactly zero at the end (or, in the rare case where your chosen payment is fully covered by interest, it never runs out at all — this calculator detects that case directly, rather than returning a nonsensical duration).
The Payout Formula
This is the same level-payment annuitization formula insurers start from before layering their own costs and life-expectancy assumptions on top. With r as the periodic rate (annual rate ÷ payments per year) and n as the total number of payments:
Fixed Payment — solve for number of payments: n = −ln(1 − Balance×r ÷ Payment) ÷ ln(1 + r)
That second formula only produces a real answer when the payment is larger than one period's interest on the balance (Balance × r). If it isn't, the balance earns enough each period to cover the withdrawal on its own — the payment can continue indefinitely, which is exactly the case this calculator flags rather than trying to force a number out of the math.
Fixed-Length vs. Fixed-Payment vs. Lifetime Payout Options
Everything this calculator computes falls under what the insurance industry calls a period certain payout — a fixed schedule for a fixed length of time, with no connection to anyone's age or health. That's genuinely different from the payout options a real annuity contract can offer. A Life Only payout guarantees income for as long as you live, however long that turns out to be, priced using life-expectancy tables rather than a simple countdown to zero. Joint and Survivor extends that guarantee across two people, typically at a lower monthly amount since the insurer expects to pay out over a longer combined lifespan. Life with Period Certain blends the two: lifetime income, plus a guaranteed minimum number of years paid to a beneficiary if you die early. None of these three lifetime-linked options can be computed with the formula above, since they depend on mortality data this calculator simply doesn't have — they're quotes you'd get directly from an insurer.
What This Calculator Doesn't Cover
Three things are deliberately left out, because they depend on a specific contract or specific person this calculator has no way of knowing: life expectancy and mortality credits (a real lifetime annuity's payout depends heavily on your age and gender, and insurers can often pay a bit more than pure period-certain math would suggest by pooling risk across everyone in the pool — see the mortality credits explanation below); fees (administrative charges, rider costs, and the insurer's own margin all reduce a real quote below the pure math shown here); and taxes (covered in its own section further down, since the answer depends on whether the annuity is qualified or non-qualified). None of this makes the math above wrong — it's a clean, honest benchmark for the period-certain math specifically, not a substitute for a real quote.
How Much Does a $100,000 Annuity Actually Pay?
Run purely through this calculator's period-certain math, a $100,000 balance earning a 5% return and paid down evenly over 20 years supports a monthly payout of about $660; over 10 years instead, the same balance supports roughly $1,061 a month, since a shorter payout window means each check has to be bigger to reach zero on schedule. Scale that up to a $1,000,000 balance under the same 5%-over-20-years assumptions and the monthly payout scales linearly too, to roughly $6,600 a month — the formula doesn't care about the size of the balance, only the rate, the length, and how often you're paid.
A real insurer's lifetime immediate annuity quote for the same $100,000 premium is a different product entirely, and typically lands somewhere in the neighborhood of $500 to $1,000 a month, according to industry analyses of current annuity rates — with the exact figure depending heavily on your age at purchase, your gender, and whether you add survivor or period-certain guarantees on top. Older buyers generally receive a higher monthly amount than younger buyers with an identical balance, since the insurer expects to make fewer total payments — the opposite of how the fixed-length math above works, where a longer chosen length always lowers the monthly number.
Qualified vs. Non-Qualified Annuities and Taxes
A qualified annuity is funded with pre-tax dollars, typically inside an IRA, 401(k), or similar retirement account, and follows that account's rules on required withdrawals. Because the money going in was never taxed, the entire payout is generally taxed as ordinary income when it comes out. A non-qualified annuity is funded with money that's already been taxed, so only the earnings portion of each payment is taxable — the return of your own principal isn't taxed again. Earnings are generally treated as coming out first under IRS rules, so a non-qualified payout is fully taxable in the early years and gradually becomes more tax-free-principal as the balance winds down. Separately, withdrawals taken before age 59½ typically carry a 10% early-withdrawal penalty on top of ordinary income tax, with limited exceptions (disability and certain medical situations, among others).
Choosing a Payout Length or Payment Amount
A shorter payout length produces a larger monthly check but empties the balance sooner — useful if you have a specific, time-limited need (bridging to a pension or Social Security start date, for instance) but risky if it's your only income source and you end up living well past that window with nothing left. A longer payout length does the opposite: a smaller monthly check, but income that keeps arriving for longer. If you're using Fixed Payment mode instead, the practical question flips — pick a number you can actually live on, then check whether the resulting duration comfortably outlasts how long you're likely to need the income, with some margin for uncertainty. There's no universally correct choice; it depends entirely on what else you have coming in and for how long.
Frequently Asked Questions
What's the difference between "Fixed Length" and "Fixed Payment" mode?
Fixed Length solves for the payout amount when you already know how many years you want the money to last. Fixed Payment works the other way around — you choose the payment you want, and it solves for how long that payment can continue before the balance reaches zero. Both use the same underlying formula, just solved for a different variable.
Why is my payout higher than simply dividing the balance by the number of payments?
Because the remaining balance keeps earning your entered return rate throughout the payout period, so the balance can sustain a somewhat higher payment than simple division would suggest — the return rate does part of the work alongside the principal itself.
How much does a $100,000 annuity pay per month?
Purely on the math this calculator uses, a $100,000 balance earning 5% and paid down over 20 years supports about $660 a month. A real insurer's lifetime immediate annuity quote for the same $100,000 typically runs somewhere between roughly $500 and $1,000 a month instead, since that product also prices in your age, gender, and life expectancy — factors this calculator doesn't have access to.
Does this calculator account for life expectancy or mortality credits?
No. This tool calculates a "period certain" payout — a fixed schedule over a fixed length of time, unrelated to anyone's age or life expectancy. A real lifetime annuity from an insurer instead uses mortality tables and pools risk across many annuitants, which is a fundamentally different pricing mechanism and usually produces a different number.
What happens if my desired payment is too small to ever deplete the balance?
If the payment you enter in Fixed Payment mode is less than or equal to the interest the balance earns in a single period, the balance never shrinks — it can sustain that payment indefinitely. This calculator detects that case and tells you directly rather than returning a meaningless or wildly large duration.
Are annuity payouts taxable?
For a non-qualified annuity (funded with after-tax money), only the portion of each payment that represents earnings is taxed as ordinary income; the portion that represents your original principal is not. For a qualified annuity funded with pre-tax dollars (inside an IRA or 401(k), for instance), the entire payout is typically taxable as ordinary income. This isn't tax advice — confirm your specific situation with a tax professional.
How can I check how long my annuity will last?
Switch to the Fixed Payment tab above and enter the payment you'd like to receive — at that point this page works as an annuity duration calculator, solving for exactly how many years and months that payment can continue before the balance reaches zero (or telling you directly if the payment is small enough that it never will).
This calculator provides estimates for general informational purposes only and is not financial, tax, or insurance advice. It computes a period-certain payout using a constant assumed return rate — real annuity contracts price in fees, life expectancy, and other factors that can meaningfully change the actual number. Consult a licensed financial or insurance professional before making a purchase decision.