Annuity Calculator

An annuity converts a pile of savings into a stream of income, and the central question is usually one of two things: how much monthly income a given lump sum will buy, or how large a lump sum you need to fund the income you want. Both answers depend heavily on the rate the money earns and on how many years the payments must last, so it is worth running both before committing any retirement assets.

The calculator treats the annuity as a fixed-term payout: level monthly payments for the number of years you enter, with the remaining balance earning your chosen annual rate divided by 12 each month. In Savings to Payout mode it solves for the payment, PMT = PV × r(1 + r)^n / ((1 + r)^n − 1), where r is the monthly rate and n the number of months; in Payout to Amount Needed mode it runs the same formula in reverse for the lump sum, PV = PMT × ((1 + r)^n − 1) / (r(1 + r)^n). It uses no mortality tables, so it will not match an insurer's quote for a lifetime annuity, and it does not model deferred or variable annuities. A comparison table repeats the result at 3% to 7%.

Two forces can quietly erode what you actually keep. Inflation chips away at the buying power of a fixed payment over time, and variable annuities expose your income to investment risk, so weigh your own tolerance honestly. Fees and surrender charges deserve the same scrutiny, since they cut into net income more than most people expect. Treat these figures as a starting point and confirm with a financial advisor that an annuity fits your wider goals and tax picture.