Annuity Payment Calculator

An annuity payment is a steady, fixed-period payout while the remaining balance keeps earning interest. It answers a common retirement question in reverse. Instead of asking what a stream of payments is worth today, it asks what steady payment a given balance can sustain until it's exhausted.

This calculator finds that level payment from your principal, interest rate, term, and payment frequency, and shows how much of the total payout is your original principal versus interest earned along the way.

How does this calculator work?

Enter the annuity's principal amount, the interest rate the balance earns during payout, the payment period in years, and how often you'd like to be paid.

The payment is solved using the payment frequency and the rate. That is, the annual rate divided by your payment frequency, over years × frequency periods. That means the frequency changes the answer, not just how it's displayed. That’s because monthly payments draw the balance down throughout the year, so it earns slightly less interest than with a single year-end payment, and the calculator prices that timing in.

The results show the per-payment amount, the annual payment behind it, the total payout over the term, and how much of that total is interest. The data table breaks the payout into one row per year. Or the user can toggle above it, one row per payment, showing the starting balance, payment, principal, interest, and ending balance. Then the charts track the principal/interest split, the declining balance, and cumulative payments.

Worked example

A $500,000 balance earning 5% pays out monthly over a 20-year retirement.

Principal

$500,000

Rate / term

5% / 20 yrs

Annual payment

$39,597

Monthly payment

$3,300

Total paid out

$791,947

Interest portion

$291,947

How the numbers work

The payment is the present-value annuity formula run in reverse, at the monthly rate: $500,000 = payment × the annuity factor for 5% ÷ 12 over 240 months, which solves to about $3,300 a month or $39,597 a year.

The 240 monthly payments add up to $791,947. That exceeds the $500,000 you started with because the undrawn balance keeps earning 5% while it's paid down. The $291,947 difference is interest. Paid annually instead, the same balance supports $40,121 a year and $802,426 in total: the balance stays invested longer between payouts, so it earns about $10,500 more.

So the $500,000 supports $3,300 a month for 20 years, and $291,947 of the $791,947 total is interest the balance earned while being drawn down.

This is the same math as a loan payment, just from the lender's side. The remaining balance keeps earning, which is why total payments far exceed the starting principal.

Fixed-term payout vs. lifetime income

This calculator models a fixed-period payout: payments run for a set number of years and then stop when the balance hits zero. That's different from a life annuity, which pays for as long as you live and so protects against outliving your money. A life annuity typically pays less per period and forfeits any remainder when you die. Use the fixed-term figure here to understand the mechanics and to gauge how long a balance can last at a given withdrawal level.