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Annuity Calculator

Calculate annuity payouts or determine how much principal is required to sustain a specific payout over time.
Calculator
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Analysis
Interpretation of the current calculator output

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How to Use

Step-by-step instructions
  1. 1Select what you want to calculate (The payout size, or the required starting balance).
  2. 2If calculating payout, enter your total starting principal.
  3. 3If calculating required principal, enter how much you want to be paid periodically.
  4. 4Input the expected interest rate or return.
  5. 5Set the duration of the annuity (how long it must last).

Present Value of an Ordinary Annuity

Annuity calculations rely on the Present Value (PV) formula. If you know how much money you have (PV), you can solve for the payout (PMT). If you know how much you want to be paid (PMT), you can solve for the required starting balance (PV).
PV = PMT × [1 - (1+r)^-n] / r

Variables:

PVPresent Value / Initial Principal
PMTPeriodic Payout Amount
rInterest rate per period
nTotal number of periods

Example

Retirement Annuity Scenario

Inputs:

Calc Mode:Calculate Payout
Starting Principal:$500,000
Duration:20 Years
Interest Rate:5%

Steps:

  1. 1.Find total periods: 20 years * 12 payments = 240 payments
  2. 2.Find period rate: 5% / 12 = 0.416%
  3. 3.Apply PV Annuity formula reversed to solve for PMT.
  4. 4.Calculate: PMT = $500k * 0.00416 / (1 - (1.00416)^-240)
Result:
$3,299.78 Fixed Monthly Payout

Frequently Asked Questions

What happens when the duration ends?

In a standard fixed-period annuity calculation, the principal balance reaches exactly $0.00 at the end of the duration.

Is this for a fixed or variable annuity?

This calculator assumes a fixed interest rate and a fixed payout schedule, which models a fixed annuity or a very stable withdrawal strategy from a portfolio.