{"id":302,"date":"2015-06-02T09:58:08","date_gmt":"2015-06-02T07:58:08","guid":{"rendered":"http:\/\/wpcalc.com\/?p=302"},"modified":"2026-09-30T19:23:30","modified_gmt":"2026-09-30T16:23:30","slug":"annuity-payout","status":"publish","type":"post","link":"https:\/\/wpcalc.com\/en\/finance\/annuity-payout\/","title":{"rendered":"Annuity Payout Calculator"},"content":{"rendered":"<section class=\"not-prose calculator-box\" aria-labelledby=\"calculator-title\"><div class=\"flex items-baseline sm:items-center justify-between gap-2 sm:gap-3\"><div class=\"flex flex-col sm:flex-row sm:items-center gap-2\"><span class=\"icon icon-calculator text-primary-700! text-base! dark:text-primary-300!\" aria-hidden=\"true\"><\/span><h2 id=\"calculator-title\" class=\"text-lg font-display font-bold\">Annuity Payout Calculation Tool<\/h2><\/div><div class=\"calcdash-favorite group\">\n  <button type=\"button\" class=\"favorite\" id=\"favorite\" data-favorite-id=\"302\" data-favorite-title=\"Annuity Payout\" data-favorite-url=\"https:\/\/wpcalc.com\/en\/finance\/annuity-payout\/\" data-favorite-excerpt=\"Calculate the lump sum (present value) needed today to fund a series of equal periodic payments. Enter the payment amount, annual interest rate, and number of periods to get the required principal.\" aria-label=\"Add to Favorites\" data-favorite-icon=\"icon icon-loan\">\n    <span class=\"icon icon-shape-star-empty\" aria-hidden=\"true\"><\/span>\n  <\/button>\n  <div class=\"calcdash-favorite__tip\" aria-hidden=\"true\">\n   <span class=\"favorite-tooltip\" id=\"favorite-tooltip\"><\/span>\n  <\/div>\n  <span class=\"sr-only\" role=\"status\" id=\"favorite-status\"><\/span>\n<\/div><\/div><form action=\"https:\/\/wpcalc.com\/en\/finance\/annuity-payout\/\" method=\"POST\" class=\"calculator\" id=\"calculator-302\" data-post=\"302\"><fieldset class=\"fieldset-input\"><legend class=\"sr-only\">Input Fields<\/legend><div class=\"field has-term\" id=\"input-1\"><label for=\"field-1\">Periodic payment<\/label><div class=\"term\">PMT<\/div>  <div class=\"absolute bottom-0 left-16 top-8 w-2 h-0.5 bg-blue-500\"><\/div><input type=\"text\" name=\"periodic_payment\" id=\"field-1\" aria-describedby=\"calc-unit-1 calc-info-1\" data-number inputmode=\"decimal\" autocomplete=\"off\" spellcheck=\"false\" min=\"0\" value=\"5000\"\/><div class=\"unit\" id=\"calc-unit-1\">$<\/div><small id=\"calc-info-1\">Enter the periodic payment amount<\/small><\/div><div class=\"field has-term\" id=\"input-2\"><label for=\"field-2\">Annual interest rate<\/label><div class=\"term\">r<\/div>  <div class=\"absolute bottom-0 left-16 top-8 w-2 h-0.5 bg-blue-500\"><\/div><input type=\"text\" name=\"annual_interest_rate\" id=\"field-2\" aria-describedby=\"calc-unit-2 calc-info-2\" data-number inputmode=\"decimal\" autocomplete=\"off\" spellcheck=\"false\" min=\"0\" max=\"100\" value=\"5\"\/><div class=\"unit\" id=\"calc-unit-2\">%<\/div><small id=\"calc-info-2\">Enter the annual interest rate<\/small><\/div><div class=\"field has-term\" id=\"input-3\"><label for=\"field-3\">Number of periods<\/label><div class=\"term\">n<\/div>  <div class=\"absolute bottom-0 left-16 top-8 w-2 h-0.5 bg-blue-500\"><\/div><input type=\"text\" name=\"number_of_periods\" id=\"field-3\" aria-describedby=\"calc-unit-3 calc-info-3\" data-number inputmode=\"decimal\" autocomplete=\"off\" spellcheck=\"false\" min=\"1\" max=\"100\" value=\"20\"\/><div class=\"unit\" id=\"calc-unit-3\">years<\/div><small id=\"calc-info-3\">Enter the number of periods<\/small><\/div><\/fieldset><div class=\"buttons\"><button type=\"submit\" data-text=\"Re-Calculate\" id=\"calculate-button\" data-post=\"302\">Calculate<\/button><button type=\"reset\">Reset<\/button><\/div><div class=\"field is-checkbox hidden!\" id=\"field-auto-calc\"><input type=\"checkbox\" id=\"auto-calc\"><label for=\"auto-calc\">Calculate automatically<\/label><small>If enabled, the result will update automatically when you change any value.<\/small><\/div><div class=\"fieldset-result is-hidden\" aria-labelledby=\"result-title\" aria-live=\"polite\" role=\"region\"> <h3 class=\"result-title bg-gradient-to-r from-primary-50 to-gray-50 dark:from-primary-900 dark:to-gray-800\" id=\"result-title\"><span class=\"icon icon-s-pulse\" aria-hidden=\"true\"><\/span> Your Results<\/h3><div class=\"result-box\"><div class=\"field-result\" id=\"output-1\"><span class=\"field-title\"><span>Required Principal<\/span><\/span><span class=\"field-value\" id=\"result-1\" data-unit=\"$\"><\/span><button type=\"button\" class=\"copy-result\" data-tooltip=\"Copy Result\" aria-label=\"Copy Result\"><span class=\"copy-icon icon icon-document-copy\" aria-hidden=\"true\"><\/span><\/button><\/div><\/div><div class=\"result-actions\"><button type=\"button\" class=\"copy-link\"><svg viewBox=\"0 0 20 20\" fill=\"currentColor\" aria-hidden=\"true\"><path d=\"M12.232 4.232a2.5 2.5 0 0 1 3.536 3.536l-1.225 1.224a.75.75 0 0 0 1.061 1.06l1.224-1.224a4 4 0 0 0-5.656-5.656l-3 3a4 4 0 0 0 .225 5.865.75.75 0 0 0 .977-1.138 2.5 2.5 0 0 1-.142-3.667l3-3Z\"\/><path d=\"M11.603 7.963a.75.75 0 0 0-.977 1.138 2.5 2.5 0 0 1 .142 3.667l-3 3a2.5 2.5 0 0 1-3.536-3.536l1.225-1.224a.75.75 0 0 0-1.061-1.06l-1.224 1.224a4 4 0 1 0 5.656 5.656l3-3a4 4 0 0 0-.225-5.865Z\"\/><\/svg><span class=\"copy-link__text\">Copy link to this calculation<\/span><\/button><span class=\"sr-only\" role=\"status\" id=\"copy-link-status\"><\/span><\/div><\/div><a href=\"#respond\" class=\"hidden transition-opacity duration-300 opacity-0 w-50 text-sm justify-center items-center gap-2 px-4 py-2 rounded bg-gray-200 text-gray-700 hover:bg-gray-300\" id=\"leave-comment\"><span class=\"icon icon-comments\" aria-hidden=\"true\"><\/span>Leave a Comment<\/a><\/form><\/section><section id=\"calc-reactions\" class=\"not-prose hidden my-12 bg-gradient-to-r from-primary-50 to-gray-50 border border-indigo-100 rounded-xl px-6 py-4 shadow-sm\" data-post=\"302\" aria-live=\"polite\" aria-labelledby=\"calc-reactions-title\"><p id=\"calc-reactions-title\" class=\"text-sm text-gray-500 text-center mb-2\">How did this result make you feel?<\/p><div role=\"group\" aria-labelledby=\"calc-reactions-title\" class=\"grid grid-cols-3 sm:flex sm:flex-row sm:justify-around gap-4 sm:items-center sm:flex-wrap\"><button type=\"button\" aria-pressed=\"false\" class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"like\"><span class=\"reaction-count\" data-reaction-count=\"like\">0<\/span><span class=\"reaction text-3xl\" aria-hidden=\"true\">\ud83d\ude00 <\/span><span class=\"reaction-description font-medium\">Like <\/span><\/button><button type=\"button\" aria-pressed=\"false\" class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"helpful\"><span class=\"reaction-count\" data-reaction-count=\"helpful\">0<\/span><span class=\"reaction text-3xl\" aria-hidden=\"true\">\ud83d\udca1 <\/span><span class=\"reaction-description font-medium\">Helpful <\/span><\/button><button type=\"button\" aria-pressed=\"false\" class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"confused\"><span class=\"reaction-count\" data-reaction-count=\"confused\">0<\/span><span class=\"reaction text-3xl\" aria-hidden=\"true\">\ud83d\ude15 <\/span><span class=\"reaction-description font-medium\">Confused <\/span><\/button><button type=\"button\" aria-pressed=\"false\" class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"disappointed\"><span class=\"reaction-count\" data-reaction-count=\"disappointed\">0<\/span><span class=\"reaction text-3xl\" aria-hidden=\"true\">\ud83d\ude1e <\/span><span class=\"reaction-description font-medium\">Disappointed <\/span><\/button><button type=\"button\" aria-pressed=\"false\" class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"inaccurate\"><span class=\"reaction-count\" data-reaction-count=\"inaccurate\">0<\/span><span class=\"reaction text-3xl\" aria-hidden=\"true\">\u274c <\/span><span class=\"reaction-description font-medium\">Inaccurate <\/span><\/button><\/div><div id=\"reaction-message\" class=\"hidden mt-8 rounded-md border border-primary-100 bg-white\/50 backdrop-blur-sm px-4 py-2 text-sm text-center shadow-sm\"><\/div><\/section><div class=\"calcdash-ad not-prose calcdash-ad--calc_result calcdash-ad--in-article\"><ins class=\"adsbygoogle\" style=\"display:block\" data-ad-client=\"ca-pub-1721569815777345\" data-ad-slot=\"6317458308\" data-ad-layout=\"in-article\" data-ad-format=\"fluid\"><\/ins><script>(adsbygoogle = window.adsbygoogle || []).push({});<\/script><\/div>\n<style id=\"wpcoderpro-inline-1\">.formula-box {\r\n\tborder-bottom: none !important;\r\n}<\/style><section class=\"formula-box\" aria-labelledby=\"formula-title\">\r\n\t<div id=\"formula-title\" class=\"not-prose font-display mb-4\"><span class=\"icon icon-formula\" aria-hidden=\"true\"><\/span><h2>Annuity Payout Formula<\/h2><\/div>\r\n\t<figure class=\"not-prose formula\">\r\n\t\t<figcaption class=\"formula-title\">Formula<\/figcaption>\r\n\t\t<div class=\"text-base text-gray-800\" id=\"formula\">\n\\[ P = PMT \\times \\frac{1 - (1 + r)^{-n}}{r} \\]\n<\/div>\r\n\t<\/figure>\r\n\t<\/p>\n<p><strong>Where:<\/strong><\/p>\n<ul>\n<li>\\(P\\) \u2014 required principal, i.e. the present value of the annuity ($)<\/li>\n<li>\\(PMT\\) \u2014 periodic payment amount ($)<\/li>\n<li>\\(r\\) \u2014 interest rate per period, as a decimal (e.g. 5% = 0.05)<\/li>\n<li>\\(n\\) \u2014 total number of payment periods<\/li>\n<\/ul>\n<p>This formula discounts each future payment back to today at rate \\(r\\) and sums the results. It answers the question: how much money must be set aside now, earning \\(r\\) per period, to fully fund \\(n\\) payments of \\(PMT\\)? If the interest rate is zero, no discounting applies and the principal is simply \\(P = PMT \\times n\\).<\/p>\n<p>\r\n<\/section>\n<style id=\"wpcoderpro-inline-459\">.calculation-box {\r\n\tborder-bottom: none !important;\r\n}<\/style><section id=\"calculation\" class=\"calculation-box\" aria-labelledby=\"calculation-title\">\r\n\t<div id=\"calculation-title\" class=\"not-prose font-display\"><span class=\"icon icon-unordered-list\" aria-hidden=\"true\"><\/span><h2>Annuity Payout \u2013 Calculation Example<\/h2><\/div>\r\n\r\n<\/p>\n<p><strong>Example:<\/strong> you want to withdraw $5,000 at the end of each year for 20 years from an account that earns 5% annually. How much must be deposited today?<\/p>\n<p>\\[ P = 5000 \\times \\frac{1 - (1 + 0.05)^{-20}}{0.05} \\]<\/p>\n<p>\\[ P = 5000 \\times \\frac{1 - 0.37689}{0.05} = 5000 \\times 12.46221 \\]<\/p>\n<p><strong>Result:<\/strong> the required principal is <strong>$62,311.05<\/strong>. Depositing this amount today at 5% per year allows exactly twenty annual withdrawals of $5,000, exhausting the balance with the final payment.<\/p>\n<p>\n\r\n<\/section>\n<h2>How to Use the Annuity Payout Calculator<\/h2>\n<ol>\n<li>Enter the <strong>Periodic payment<\/strong> \u2014 the amount paid out each period, for example $5,000 per year.<\/li>\n<li>Enter the <strong>Annual interest rate<\/strong> \u2014 the rate the principal earns each period, such as 5 for 5%.<\/li>\n<li>Enter the <strong>Number of periods<\/strong> \u2014 how many payments will be made, e.g. 20 years of payouts.<\/li>\n<li>Read the <strong>Required Principal<\/strong> \u2014 the lump sum needed today to fund all the payments.<\/li>\n<\/ol>\n<p>Make sure the interest rate and the payment frequency match: for monthly payments, use a monthly rate (annual rate \u00f7 12) and count the periods in months. The calculator treats each period as one step, so consistency between \\(r\\) and \\(n\\) is essential for correct results.<\/p>\n<h2>What Is an Annuity Payout?<\/h2>\n<p>An annuity payout is a series of equal payments made at regular intervals \u2014 monthly, quarterly, or annually \u2014 funded by a single lump sum. This calculator computes the <em>present value<\/em> of those payments: the amount of money that, invested today at the given interest rate, is exactly enough to deliver every payment and be fully depleted at the end.<\/p>\n<p>The key principle is the time value of money: a dollar received in the future is worth less than a dollar today, because money held now can earn interest. Each future payment is therefore discounted back to the present at rate \\(r\\), and the sum of all discounted payments is the principal required. In the example above, twenty payments of $5,000 total $100,000 in nominal terms, yet only $62,311.05 is needed today \u2014 the remaining $37,688.95 comes from interest earned over the 20 years.<\/p>\n<p>This calculation appears in many real situations: sizing a retirement nest egg to produce a given income, valuing a structured settlement or lottery payout offered as a lump sum versus installments, pricing pension buyouts, and evaluating any contract that promises level payments over a fixed term. For a broader look at turning savings into income streams, see the <a href=\"https:\/\/wpcalc.com\/en\/finance\/retirement-planner\/\">Retirement Planner<\/a> and the <a href=\"https:\/\/wpcalc.com\/en\/finance\/monthly-investment-savings\/\">Monthly Investment Savings<\/a> calculators.<\/p>\n<h2>Interpreting the Result<\/h2>\n<p>The required principal rises with larger payments, more periods, and \u2014 importantly \u2014 <em>lower<\/em> interest rates. When rates fall, less interest is earned on the remaining balance, so a bigger lump sum is needed to sustain the same payout. This is why annuity and pension costs climb in low-rate environments.<\/p>\n<p>Compare the result with alternatives before committing. If a settlement offers you a lump sum below the calculated present value, taking the installments is financially better (ignoring taxes and personal circumstances); if the lump sum exceeds it, cashing out may be attractive. The same logic applies to buying an annuity: paying more than the present value means overpaying for the income stream. To discount a single future amount instead of a series of payments, use the <a href=\"https:\/\/wpcalc.com\/en\/finance\/present-value-for-future-value\/\">Present Value for Future Value<\/a> calculator; for growing payments rather than fixed ones, see the <a href=\"https:\/\/wpcalc.com\/en\/finance\/present-value-for-growing-perpetuity\/\">Present Value of Growing Perpetuity<\/a> calculator.<\/p>\n<h2>Assumptions and Limitations<\/h2>\n<ul>\n<li><strong>Ordinary annuity:<\/strong> the formula assumes payments occur at the <em>end<\/em> of each period. For payments at the beginning (an annuity due), multiply the result by \\((1 + r)\\).<\/li>\n<li><strong>Level payments:<\/strong> the payment amount never changes. For inflation-adjusted income, a growing-annuity formula is needed.<\/li>\n<li><strong>Constant rate:<\/strong> the interest rate is fixed for the entire term. Variable-rate accounts and market volatility are not modeled.<\/li>\n<li><strong>Full depletion:<\/strong> the balance reaches exactly zero after the last payment \u2014 nothing is left over and nothing is bequeathed.<\/li>\n<li><strong>No taxes or fees:<\/strong> the result is a pre-tax figure. Income tax on payouts, annuity fees, and purchase loads can significantly change the true cost or value.<\/li>\n<\/ul>\n<p>For a related calculation that finds the payment amount from a known principal \u2014 the mirror image of this tool \u2014 try the <a href=\"https:\/\/wpcalc.com\/en\/finance\/present-value-for-annuity\/\">Present Value for Annuity<\/a> calculator.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Calculate the lump sum (present value) needed today to fund a series of equal periodic payments. Enter the payment amount, annual interest rate, and number of periods to get the required principal.<\/p>\n","protected":false},"author":70,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5],"tags":[30],"class_list":["post-302","post","type-post","status-publish","format-standard","hentry","category-finance","tag-mortgage"],"acf":[],"_links":{"self":[{"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/posts\/302","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/users\/70"}],"replies":[{"embeddable":true,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/comments?post=302"}],"version-history":[{"count":3,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/posts\/302\/revisions"}],"predecessor-version":[{"id":66045,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/posts\/302\/revisions\/66045"}],"wp:attachment":[{"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/media?parent=302"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/categories?post=302"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/tags?post=302"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}