Pensions Annuity Calculator
A pension lump sum is just a number until you convert it into a paycheck. This pensions annuity calculator turns your pot into a monthly, quarterly, or yearly payout over any horizon you choose, from 1 to 60 years, showing how much of each check is your own principal coming back and how much is growth, with a year-by-year balance schedule so you can see the pot run down to zero.
Lump sum to retirement paycheck, over any term from 1 to 60 years.
Fixed payout-period estimate. Real immediate annuities are priced on your age and mortality tables, not just an interest rate. Not financial advice.
Year-by-year balance as payouts are drawn. Run the calculator to fill this table.
| Year | Starting balance | Paid out | Ending balance |
|---|
Quick Answer
A $200,000 pension pot paying out over 20 years at 5% annual return produces $1,319.91 a month, or $316,779 in total payouts. Of that, $116,779 is interest earned and $200,000 is your own principal returning to you. Quarterly checks would be about $3,969; one yearly check about $16,049. Stretch the same pot over 30 years and the monthly check falls to about $1,074, while total interest rises to roughly $187,000 because the money compounds longer.
Key takeaways
- Every payout mixes principal and interest. Early checks are mostly your own money coming back; interest dominates later. That is why annuity payout rates look higher than interest rates.
- Frequency barely changes the total. Monthly, quarterly, and yearly payouts differ by only a few thousand dollars over 20 years; pick the rhythm that fits your bills.
- Any term means any term. This calculator accepts 1 to 60 years, not just the standard 15, 20, or 25-year presets other tools force on you.
- This models a fixed payout period. A true lifetime annuity pools longevity risk across thousands of buyers; this calculator cannot replicate mortality credits.
How the payout is calculated
The math is the mirror image of a loan: instead of borrowing a lump sum and repaying it, you hand over a lump sum and receive it back with interest. The formula is the standard amortization formula run in reverse, which is why our amortization schedule calculator and this tool share the same engine with the signs flipped.
- Lump sum in: your pension pot or annuity purchase price. $200,000 in the example.
- Periodic rate: annual return divided by payouts per year. Monthly at 5% means 0.4167% per month.
- Level payout: the fixed payment that exactly exhausts the balance at the end of the term. Payment = lump sum x r(1+r)^n / ((1+r)^n – 1), where r is the periodic rate and n is the number of payments.
- Split principal and interest: total payouts minus the lump sum is the interest earned over the period.
On the $200,000 example: $1,319.91 x 240 payments = $316,779 total, of which $116,779 (37%) is interest. The year-by-year schedule tab shows that split in motion: the balance falls slowly at first, because early payments are mostly principal, then drops faster as interest does more of the work. Because the schedule steps through every single payment period, its final row lands on $0, exactly reconciling with the payment formula. That reconciliation is not cosmetic: a schedule that ends anywhere else is quietly using different math from the headline payment.
Monthly vs quarterly vs yearly: does it matter?
Less than most people expect. The payment formula is the same at every frequency; only the periodic rate and the payment count change. Yearly pays slightly more in total because the balance compounds undisturbed between checks, but the difference is small enough that convenience should decide.
| Frequency | Each check | Payments | Total | Verdict |
|---|---|---|---|---|
| Monthly | $1,319.91 | 240 | $316,779 | Matches monthly bills; most common choice |
| Quarterly | $3,969.30 | 80 | $317,544 | $765 more than monthly over 20 years |
| Yearly | $16,048.52 | 20 | $320,970 | $4,191 more than monthly; harder to budget |
$200,000, 5%, 20 years. If your bills are monthly, take monthly: the $4,191 yearly edge over two decades is not worth a year of budgeting friction.
Annuitize or keep the lump sum invested?
A fixed payout period is essentially a do-it-yourself version of what insurers sell, minus the longevity pooling. Weigh the two paths honestly before you commit a pot you cannot get back.
| Take payouts (fixed period) | Stay invested (draw yourself) |
|---|---|
| Guaranteed level income for the full term, on the assumed return | Market risk: a bad sequence of returns can wreck the plan |
| No market risk during payout | Requires discipline on withdrawals |
| Simple: one decision, then checks arrive | Heirs keep whatever remains |
| Protects against spending the pot too fast | Flexibility to change course |
The decisive difference is longevity. A lifetime immediate annuity keeps paying if you live to 100; this fixed-period tool stops at the term you choose, and a self-managed pot can run out. If you expect to live well past average, the insurance version wins on that dimension; if not, the fixed period keeps more of your money with your estate. Our annuity income calculator covers the deferred and lifetime side of that comparison, including a deferral period this tool does not model, while our pension distribution calculator helps weigh taking the lump sum at all. For service members weighing a defined benefit promise against a lump sum, our military retirement calculator frames the same trade-off.
What this tool leaves out, and what annuity calculators typically omit
Most annuity payout calculators we tested show the payment and stop, never splitting principal from interest, which hides how much of each check is your own money. Several default to unrealistic return assumptions with no way to stress-test lower rates. And almost none connect fixed-period math to actual market immediate-annuity quotes, leaving users unable to judge whether an insurer’s offer is fair. This calculator splits every dollar, offers any payout frequency and any term, and shows the full schedule.
Its own limits deserve equal candor. It assumes one constant return for the whole term: real returns vary, and a lower realized return means the pot runs out early unless payments fall. It ignores fees, taxes, and inflation: a $1,319.91 check buys less in year 20 than in year 1. It models no mortality credits, no joint-life or period-certain options, and no insurer default risk. Before buying a real annuity, get the offer in writing and compare its monthly check against this tool’s fixed-period figure at the same term: a large gap in the insurer’s disfavor is worth a second quote, and a large gap in its favor usually means you are comparing a lifetime promise against a fixed term.
Frequently Asked Questions
About $1,320 a month over 20 years at 5% in a fixed payout period, or $316,779 in total. A lifetime immediate annuity is priced differently, on age and mortality, so its check for the same lump sum will differ.
Payment = lump sum x r(1+r)^n / ((1+r)^n – 1), where r is the periodic rate (annual return divided by payments per year) and n is the number of payments. It is the same amortization formula as a mortgage, run in reverse.
No. The payout rate is yearly payments divided by the premium: $15,839 a year on a $200,000 pot is 7.92%, well above the 5% interest rate, because each payment includes a return of your own principal.
With a fixed payout period, the remaining balance goes to your heirs or estate. With a life-only immediate annuity, payments stop and the insurer keeps the remainder; period-certain options pay beneficiaries instead, for a slightly lower check.
Nearly identical in total; yearly pays slightly more ($320,970 vs $316,779 over 20 years on the example) because the balance compounds between checks. Choose based on how you pay bills, not on the small total difference.
Any term from 1 to 60 years. Enter the exact number of years you want; the payment and the year-by-year schedule both recompute for that term.
A lifetime annuity pools longevity risk: it pays for as long as you live, priced from mortality tables, and can outlast a fixed term. This calculator models a fixed payout period only, so it cannot replicate mortality credits or lifelong income.
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References
- GraphCalc. Annuity Payout Calculator (fixed-period payout formula and worked example). Accessed October 25, 2026.
- Calci. Annuity Payout and Income Calculator (amortization formula; $200,000, 20 years, 5% example yielding $1,319.91 per month). Accessed October 25, 2026.
- MyAnnuityStore. How Much Does a $200,000 Annuity Pay? (single-premium immediate annuity quotes vary by age, rates, and contract options). Accessed October 25, 2026.