Annuity Payout Calculator
Calculate how long your savings will last with regular withdrawals, or how much you can withdraw monthly from a retirement nest egg.
What Is an Annuity Payout?
An annuity payout is a series of regular withdrawals from a savings account or investment portfolio. The key question in retirement planning is: given a nest egg and an investment return, how much can I withdraw each month without running out of money?
The Two Core Formulas
Formula 1 — How much can I withdraw for N years?
PMT = PV × r / [1 − (1+r)^(−n)]
Formula 2 — How long will my money last at a given withdrawal?
n = −log(1 − PV × r / PMT) / log(1 + r)
Where:
- PV = Current portfolio balance (present value)
- PMT = Monthly withdrawal amount
- r = Monthly return rate (annual rate ÷ 12)
- n = Number of months
The 4% Safe Withdrawal Rate Rule
In 1994, financial planner William Bengen analyzed historical market data and found that retirees could safely withdraw 4% of their portfolio in year one, then adjust for inflation each year, with a high probability of their portfolio lasting 30 years. This became known as the 4% Rule (also called the Safe Withdrawal Rate, or SWR).
Example: A $1,000,000 nest egg × 4% = $40,000 per year = $3,333/month.
More recent research suggests 3.0%–3.5% may be safer given lower expected bond returns. Some planners use 5% for shorter retirements (under 20 years).
Sequence of Returns Risk
One of the biggest risks in retirement is a market crash early in retirement. Even if the average return is the same, a bad sequence (crash first, then recovery) is far worse than a good sequence (recovery first, then crash). This is why many retirees hold 1–2 years of expenses in cash as a buffer.
Fixed vs. Variable Annuities
A fixed annuity guarantees a set payment regardless of market performance (purchased from an insurance company). A variable annuity invests in the market, so payouts fluctuate. This calculator models a variable/investment account scenario.
Inflation Adjustment
This calculator uses a nominal (not inflation-adjusted) rate. To account for inflation, subtract the expected inflation rate from your expected return. For example, if you expect 7% returns and 3% inflation, use 4% as your real return rate.
How we build and check this calculator
This calculator runs entirely in your browser, so the numbers you enter stay on your device. The math behind it is written by hand and tested against worked examples and standard references before the page goes live.
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