Annuity Payout Calculator

This calculator can estimate the annuity payout amount for fixed payout length or estimate the length an annuity can last if supplied a fixed payout amount. Please use our Annuity Calculator to estimate the end balance of an annuity for the accumulation phase.

Starting Principal  
Interest / Return Rate %
Inflation Rate %
Years to Payout years
Payout Frequency  


You can withdraw $5,511.20 monthly.

After 10 years, $5,511.20 is equivalent to $4,100.85 in purchase power.

Total interest earned: $161,344.16.

Balance/Interest Graph

Annual Balances

YearBeginning BalanceInterest Earned
In the Period
Ending Balance

RelatedAnnuity Calculator | Retirement Calculator

There are two phases in the life of an annuity: the accumulation phase and the annuity payout phase. The accumulation phase is the period during which the annuity gathers funds. There are several forms in which the deposits can be made, such as simply in cash, or converting life insurance cash values, or by making a 1035 exchange from another annuity. The latter is a provision in the tax code that allows policyholders to transfer funds from a life insurance plan, endowment, or annuity to a new policy without paying taxes. By following annuity rules, earnings will accumulate on a tax-deferred basis until withdrawals are ready to be made.

Qualified vs. Non-Qualified Annuities


A tax-qualified annuity is one used for qualified retirement plans such as IRA or 401(k). When used as a form of retirement savings, these annuities are entitled to all the tax benefits and penalties of their respective plans. However, the rules of the annuity plan still govern all matters and may override certain rules. With that said, features that are unique to annuities such as guaranteed death benefits (benefits that are promised to pay out to beneficiaries regardless of factors such as down markets and decreases in account value) may still included.


These annuities are purchased with after-tax dollars, such as a Roth IRA or disposable income. In other words, the only portion of a non-qualified annuity policy that is eligible for taxation is the portion attained during the wealth accumulation phase. A big distinction to make is that unlike qualified annuities, non-qualified annuities are not subject to minimum distribution rules after the age of 70 ½. There is no limit on the amount of non-qualified money that can be placed into an annuity, or the amount of annuities that can be purchased.


Withdrawals before the age of 59 ½ will result in a 10% early withdrawal penalty (unless an exception applies) on top of regular income tax. For all types of annuities, earnings are not taxable until money is withdrawn. Because withdrawals are taxed on a "last in, first out" (LIFO) basis, earnings come out before principal. In other words, an annuity's income stream first releases all earnings before original principal contributions.

Fixed Payment or Fixed Length Annuity

It is possible to withdraw the entire account value in a lump-sum payment, and this will not incur penalties from the annuity after 59 ½. But severe tax penalties may be applied on the savings if the amount is large, so this method is to be avoided unless absolutely necessary. The two most commonly chosen forms of annuity payouts include fixed payment or fixed length. Both are represented by tabs on the calculator. Fixed payments are usually paid in monthly installments that continue until the annuity's balance reaches zero. Conversely, fixed lengths are usually paid in monthly installments that are paid over a chosen time period, such as 10, 15 or 20 years. With the former, it is possible to accidentally choose too small or too large a fixed monthly annuity payment. With the latter, it is possible to choose too short or too long a fixed length for an annuity. In either case, it is possible that a retiree outlives the annuity, or dies when money still available. For the later, the remaining funds will be passed to the heirs. It is up to each individual to consider their situation and determine which option to choose, as there are risks associated with either decision.