💵 Annuity Calculator
Work out how much income a lump sum can pay you over a fixed number of years – or how big a lump sum you need to fund the payment you want – with level or rising payments.
Quick answer: A $500,000 lump sum earning 5% a year pays $2,922.95 a month for 25 years (paid at the end of each month), totalling $876,885 in payments – $376,885 of it interest.
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Annuity Calculator inputs
Result
Payment per month
$2,922.95
from $500,000.00 for 25 years at 5%
| Starting balance | $500,000.00 |
| Total payments received | $876,885.00 |
| Interest earned during payout | $376,885.00 |
- Payments
- 300
- Payment per year
- $35,075.40
Annuity payout schedule
| Year | Payment per month | Starting balance | Payments | Interest | Ending balance |
|---|---|---|---|---|---|
| 1 | $2,922.95 | $500,000.00 | $35,075.40 | $24,765.87 | $489,690.47 |
| 2 | $2,922.95 | $489,690.47 | $35,075.40 | $24,238.41 | $478,853.48 |
| 3 | $2,922.95 | $478,853.48 | $35,075.40 | $23,683.97 | $467,462.05 |
| 4 | $2,922.95 | $467,462.05 | $35,075.40 | $23,101.16 | $455,487.81 |
| 5 | $2,922.95 | $455,487.81 | $35,075.40 | $22,488.54 | $442,900.95 |
| 6 | $2,922.95 | $442,900.95 | $35,075.40 | $21,844.57 | $429,670.12 |
| 7 | $2,922.95 | $429,670.12 | $35,075.40 | $21,167.66 | $415,762.37 |
| 8 | $2,922.95 | $415,762.37 | $35,075.40 | $20,456.11 | $401,143.08 |
| 9 | $2,922.95 | $401,143.08 | $35,075.40 | $19,708.16 | $385,775.84 |
| 10 | $2,922.95 | $385,775.84 | $35,075.40 | $18,921.94 | $369,622.38 |
| 11 | $2,922.95 | $369,622.38 | $35,075.40 | $18,095.50 | $352,642.48 |
| 12 | $2,922.95 | $352,642.48 | $35,075.40 | $17,226.78 | $334,793.85 |
| 13 | $2,922.95 | $334,793.85 | $35,075.40 | $16,313.61 | $316,032.06 |
| 14 | $2,922.95 | $316,032.06 | $35,075.40 | $15,353.72 | $296,310.37 |
| 15 | $2,922.95 | $296,310.37 | $35,075.40 | $14,344.72 | $275,579.69 |
| 16 | $2,922.95 | $275,579.69 | $35,075.40 | $13,284.10 | $253,788.39 |
| 17 | $2,922.95 | $253,788.39 | $35,075.40 | $12,169.21 | $230,882.20 |
| 18 | $2,922.95 | $230,882.20 | $35,075.40 | $10,997.29 | $206,804.09 |
| 19 | $2,922.95 | $206,804.09 | $35,075.40 | $9,765.41 | $181,494.10 |
| 20 | $2,922.95 | $181,494.10 | $35,075.40 | $8,470.50 | $154,889.20 |
| 21 | $2,922.95 | $154,889.20 | $35,075.40 | $7,109.34 | $126,923.14 |
| 22 | $2,922.95 | $126,923.14 | $35,075.40 | $5,678.55 | $97,526.28 |
| 23 | $2,922.95 | $97,526.28 | $35,075.40 | $4,174.55 | $66,625.43 |
| 24 | $2,922.95 | $66,625.43 | $35,075.40 | $2,593.60 | $34,143.63 |
| 25 | $2,922.95 | $34,143.63 | $35,075.40 | $931.77 | $0.00 |
How to use the annuity calculator
Pick whether you want the payment a lump sum provides, or the lump sum needed for a payment. Enter the amount, the annual interest rate, how many years payments last, how often they are made and whether they come at the start or end of each period. Add a yearly increase to model inflation-linked income.
The annuity formula
PV = PMT × (1 − (1 + i)−n) ÷ i
i is the annual rate divided by payments per year and n is the total number of payments. Solving for the payment gives PMT = PV × i ÷ (1 − (1 + i)−n). With yearly increases, the calculator discounts each payment individually and sums them.
Worked example
A $500,000 balance at 5% (i = 0.05 ÷ 12) paying out over 300 months supports $2,922.95 a month. You receive $876,885 in total, of which $376,885 is interest earned on the shrinking balance. To fund the same payment rising 2% a year you would need a larger lump sum – switch the mode to see how much.
Monthly payout from $500,000 at 5%
| Years | Monthly payment |
|---|---|
| 10 | $5,303.28 |
| 15 | $3,953.97 |
| 20 | $3,299.78 |
| 25 | $2,922.95 |
| 30 | $2,684.11 |
Higher rates or shorter periods raise the payment; paying at the start of each period lowers it slightly, because the first payment comes out before any interest is earned.
Estimates for educational purposes, not financial advice.
Frequently asked questions
How is an annuity payment calculated?
Payment = PV × i ÷ (1 − (1 + i)^−n), where i is the rate per period and n the number of payments. For payments at the start of each period (annuity due) divide that result by (1 + i).
How much does a $500,000 annuity pay per month?
At 5% over 25 years, about $2,923 a month. Over 20 years it is about $3,300, and over 30 years about $2,684. A life annuity bought from an insurer depends on your age and their pricing instead.
What is a growing annuity?
An annuity whose payments rise by a fixed percentage each year, often to offset inflation. The first payment is lower than a level annuity's, but later payments are higher.
Is this the same as buying an annuity from an insurer?
This calculator models a fixed-term payout from a balance earning a steady rate – a certain annuity or drawdown plan. Insurer life annuities pay for life and include mortality pooling, fees and their own rates.