— Retirement & FIRE
Annuity Calculator
Turn a lump sum into retirement income, or work backwards from the income you want to the capital required. Choose payment timing, escalation, deferral, survivor share, or life-annuity payout rate to see income, lump sum, or future value.
Annual income
$39,597.34
- Monthly payment
- $3,299.78
- Annual income
- $39,597.34
- Total paid out
- $791,946.89
Try: Income from a $500k lump sum, Lump sum for $40k/year, Build a pot: $500/month, Life annuity at a 6% payout
— Schedule
| Year | Payments | Interest | Balance |
|---|---|---|---|
| 1 | $39,597 | $24,661 | $485,063 |
| 2 | $39,597 | $23,897 | $469,363 |
| 3 | $39,597 | $23,093 | $452,859 |
| 4 | $39,597 | $22,249 | $435,510 |
| 5 | $39,597 | $21,361 | $417,274 |
| 6 | $39,597 | $20,428 | $398,105 |
| 7 | $39,597 | $19,448 | $377,956 |
| 8 | $39,597 | $18,417 | $356,775 |
| 9 | $39,597 | $17,333 | $334,511 |
| 10 | $39,597 | $16,194 | $311,108 |
| 11 | $39,597 | $14,997 | $286,507 |
| 12 | $39,597 | $13,738 | $260,648 |
| 13 | $39,597 | $12,415 | $233,465 |
| 14 | $39,597 | $11,024 | $204,892 |
| 15 | $39,597 | $9,563 | $174,858 |
| 16 | $39,597 | $8,026 | $143,286 |
| 17 | $39,597 | $6,411 | $110,099 |
| 18 | $39,597 | $4,713 | $75,215 |
| 19 | $39,597 | $2,928 | $38,545 |
| 20 | $39,597 | $1,052 | $0 |
— Annuity projection
Download— How it works
Income from a lump sum: payment = corpus ÷ annuity factor, where the level factor = [1 − (1+r)^−n] ÷ r. Lump sum for an income: corpus = payment × factor. Future value: premium × annuity-FV factor. Annuity-due multiplies by (1+r); a life annuity uses a payout rate (income = corpus × rate).
Three questions, one engine
Every annuity question is the present or future value of a stream of payments. “Income from a lump sum” divides your capital by the annuity factor to find the largest level payment it supports over the term. “Lump sum for an income” multiplies your desired payment by the same factor to find the capital you’d need. “Future value” compounds your premiums forward to a pot. The factor itself, [1 − (1+r)^−n] ÷ r, is just the present value of $1 a period for n periods — everything else builds on it.
Worked example — a $500,000 lump sum at 5% over 20 years, paid monthly: That buys about $3,300 a month ($39,600 a year), paying out roughly $792,000 in total. Turned around: to receive $40,000 a year you’d need about $505,000 of capital.
Timing, escalation, deferral and life cover
The options change the answer in ways worth understanding. Annuity-due (payments at the start of each period) gives a slightly smaller payment than an ordinary annuity, because the provider holds your money for less time. An escalating annuity starts lower but rises each year to fight inflation. A deferral period lets the capital grow first, boosting the eventual income. And a life annuity — set a payout rate — pays for as long as you live rather than a fixed term, so it has no fixed total; the rate bakes in mortality, which is why this tool treats it as data you provide.
What it doesn’t model
This is the financial maths of annuities, not a quote. Real annuity rates depend on your age, health, gender (in some markets) and prevailing bond yields, and products add guarantee periods, surrender terms and variable/indexed returns this tool doesn’t price. Use it to understand the trade-offs — income vs lump sum, level vs escalating, single vs joint — then get an actual quote. To compare an annuity with keeping your money invested and drawing it down, see the Retirement Withdrawal and Safe Withdrawal Rate calculators.
— Reader questions
How much income will my lump sum buy?
It depends on the rate and term. A $500,000 lump sum at 5% over 20 years pays about $3,300 a month ($39,600 a year) as a level term-certain annuity. A lifetime annuity instead pays a fixed payout rate of your capital — at 6% that’s $30,000 a year.
How much capital do I need for a given income?
Multiply the income by the annuity factor for your rate and term. To receive $40,000 a year for 20 years at 5%, you’d need roughly $505,000. A lower rate or longer term needs more capital.
What’s the difference between an ordinary annuity and an annuity-due?
An ordinary annuity pays at the end of each period; an annuity-due pays at the start. Because due payments arrive earlier, each one is slightly smaller for the same capital (the factor is multiplied by 1 + the periodic rate).
What is a deferred annuity?
One where income starts after a delay. Your capital grows during the deferral period, so the eventual income is higher than an immediate annuity bought with the same amount today.
Why does an escalating annuity start lower?
Because its payments rise every year to keep pace with inflation, the provider front-loads less. You accept a smaller initial income in exchange for one that holds its spending power over time.