How to calculate annuity payout
Payout = P × r ÷ (1 − (1 + r)^−n), where r = monthly rate and n = months
Worked example. Monthly payout: $1,649.89.
Example inputs — Lump sum: $250,000; Annual return (%): 5; Payout years: 20. Starting values are illustrative.
From George Guju, founder of Calculyn · Educational calculator guidance, not professional advice.
How it works
This treats your lump sum like a loan you pay yourself back: the balance keeps earning a return while it pays out equal monthly amounts until it reaches zero.
Assumptions & limitations
- Fixed return every year
- Payments at the end of each month
- No fees or taxes
Formula and assumptions reviewed October 2026 by the Calculyn team. How we build our calculators
Frequently asked questions
Is this what an insurance company would pay?
Not exactly. Commercial annuities price in fees, life expectancy and guarantees, so quotes will differ.