Does this payment amount stay the same every period?

Yes — it computes a single, level periodic payment that fully amortizes the balance to zero by the end of the payout length, similar to how a mortgage payment stays level while the principal/interest mix shifts over time.

Why is the total withdrawn more than the original lump sum?

Because the remaining balance keeps earning the assumed return while it's being drawn down — the growth earned during the payout period, not just the original principal, funds part of each payment.

What is the '4% rule' shown for comparison?

A widely cited retirement-planning guideline suggesting a 4% first-year withdrawal (adjusted for inflation in later years) has historically had a low risk of depleting a portfolio within 30 years — shown here only as a reference point, not as this calculator's actual withdrawal method.

Does this account for inflation?

No — it calculates a level nominal payment amount; the real purchasing power of that fixed payment erodes over a long payout period if inflation is positive.

What happens if the return rate is 0%?

The formula falls back to a simple even split: payment = lump sum ÷ number of periods, with no growth contributing to the payments.

Is this the same as buying an insurance annuity product?

Conceptually similar (a lump sum converted to periodic payments), but this is a math calculator only — a real insurance annuity product involves contractual guarantees, fees, and insurer credit risk this tool doesn't model.

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Finance

Annuity Calculator

Periodic withdrawal a lump sum supports over a chosen payout length and return rate.

🔒 Runs entirely in your browser — nothing here is ever uploaded

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Last reviewed 2026-08-30

About the Annuity Calculator

Calculates the periodic payment a lump sum can support over a chosen payout length and expected return rate, amortizing the balance down to exactly zero by the end — the reverse of a savings/accumulation calculation.

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How to use it

Enter the lump sum available (savings, a rollover, or a settlement balance).
Enter the expected annual return on the remaining balance while it's being drawn down.
Enter how many years the fund should last, and how often you'd withdraw.
Read the payment amount per period, and how it compares to a simple 4% first-year withdrawal rule of thumb.

Formula

Payment = (PV × r) ÷ (1 − (1 + r)^−n), the standard annuity-payment formula, where PV is the lump sum, r is the periodic rate (annual rate ÷ periods per year), and n is the total number of periods (years × periods per year). This fully amortizes the lump sum to exactly $0 by the end of the payout length, factoring in ongoing investment growth on the remaining balance along the way.

Worked example

A $500,000 lump sum at an expected 5% annual return, paid out monthly over 25 years: a monthly payment of about $2,922, totaling roughly $877,000 withdrawn over the full period — about $377,000 more than the original $500,000, from investment growth along the way.

Monthly payment by payout length ($500,000 lump sum, 5% assumed annual return)

Monthly payment by payout length ($500,000 lump sum, 5% assumed annual return)
Payout length	Monthly payment
10 years	$5,305
15 years	$3,955
20 years	$3,301
25 years	$2,924 (tool's own example)
30 years	$2,684

Interpreting your result

This assumes a constant rate of return every period for the entire payout length, which real investment returns never actually deliver — they vary significantly year to year, and a market downturn early in the payout period can be far more damaging than the same downturn later (sequence-of-returns risk), something this simple constant-rate model doesn't capture. It also doesn't account for taxes, fees, or inflation eroding the real value of each fixed payment over a long payout period.

Recommendations

• This fully depletes the balance to $0 by the end of the payout length — for an approach that instead preserves principal indefinitely, compare against the 4% first-year withdrawal rule of thumb also shown in the results.
• A longer payout length or lower assumed return both reduce the periodic payment, since the same lump sum has to stretch further or grow less along the way.
• Real returns vary year to year, and a poor market early in the payout period is riskier than the same poor return late in the period (sequence-of-returns risk) — this constant-rate model doesn't capture that risk.

Frequently asked questions

A compound interest calculator typically projects a balance growing from contributions; this annuity calculator does the reverse — figuring out how much you can withdraw periodically from an existing lump sum so it's fully depleted by a target end date.