How to Use Our Free Annuity Payout Calculator

Once you've finished accumulating funds in an annuity, the next step is the payout phase. This is where our Annuity Payout Calculator comes in. This powerful tool helps you understand how your savings can translate into a steady stream of income. Our Free Calculator can help you answer two critical questions: "How much can I withdraw?" or "How long will my money last?"

Explaining the Annuity Payout Calculator Fields

This calculator has two modes. Here’s what the fields mean for each:

• Starting Principal: The total amount of money in your annuity when you begin the payout phase.
• Interest/Return Rate (%): The estimated annual rate of return your annuity will continue to earn during the payout phase.
• Years to Payout (Fixed Length mode): The number of years you want the annuity to provide payments for.
• Fixed Payout Amount (Fixed Payment mode): The specific amount of money you want to withdraw each period.
• Payout Frequency: How often you receive payments—monthly, quarterly, or annually.

How the Calculator Formulas Work

Our Free Annuity Calculator uses standard financial formulas to give you accurate projections.

1. Calculating Your Payment (Fixed Length)

When you want to know how much you can withdraw over a set number of years, the calculator uses the **annuity payment formula**. This formula calculates a level payment that will fully deplete the starting principal over the specified term, considering that the remaining balance continues to earn interest. It ensures that the last payment brings the balance to exactly zero.

2. Calculating How Long Your Money Will Last (Fixed Payment)

When you specify how much you want to withdraw each month, the calculator uses the **NPER (Number of Periods) formula**. This formula calculates how many payments of a fixed amount can be made from your starting principal before the funds run out, again accounting for the interest being earned on the declining balance. The result is then converted into years and months.

By using this versatile Annuity Payout Calculator, you can model different scenarios to find a payout strategy that aligns perfectly with your retirement income needs.