Given a lump sum and an expected return, how much can be withdrawn every month for a set number of years so the balance runs out exactly on schedule, not early and not with money left over?
How it works
This is the mirror image of a loan payment: instead of finding the payment that pays off a debt over a term, it finds the payment a balance can sustain over a term before hitting zero. Same formula, opposite direction — one drains a balance owed, the other drains a balance owned.
Fixed-period vs. lifetime annuities
This calculates a fixed-period payout — guaranteed for a set number of years, then the money is gone. A lifetime annuity instead guarantees payments for as long as the person lives, which involves insurance and mortality pricing this calculator doesn’t model.
How to use this calculator
- Enter the lump sum and the return it’s expected to earn while being paid out.
- Enter how many years the payout should last.
Frequently asked questions
What happens to the money if I live longer than the payout period?
With a fixed-period structure, the payments simply stop once the term ends and the balance reaches zero — there’s no guarantee beyond the years chosen.
Is this the same as a retirement account withdrawal rate like the 4% rule?
No — the 4% rule assumes an indefinite time horizon and doesn’t deliberately draw the balance to zero; this calculator solves for exactly depleting a balance over a specific, chosen number of years.
Does this account for fees an actual annuity product would charge?
No — it’s the underlying math only. A real annuity product would layer in insurance costs and fees that reduce the effective payout below this figure.
