Work out how much an annuity can pay you over a set number of years, or how long a payment of your choosing will last.
An annuity has two stages. In the accumulation phase you build up a balance. In the payout phase, which this calculator covers, the balance is paid back to you in a series of equal payments while whatever remains keeps earning interest. Because the leftover money keeps growing, the total you receive is larger than the principal you started with.
With a fixed length payout you decide how many years the money should last. The calculator finds the largest equal payment that brings the balance to exactly zero on the last payment date, which is the same arithmetic as a loan payment run in reverse. With a fixed payment payout you decide how much you want each time, and the calculator counts the payments until the money is gone. If your payment is no larger than the interest earned each period, the balance never shrinks and you can withdraw forever.
The yearly rate is converted to the matching rate for your payout frequency, so a 6% yearly rate grows the balance by 6% over a full year whether you are paid monthly or annually. Each period the balance earns interest, then the payment comes out at the end of the period. The yearly schedule adds up the interest and the withdrawals for each year and shows the balance that remains.
A fixed length payout chooses how many years the money should last and works out the largest equal payment that uses it up exactly. A fixed payment payout chooses the amount you want to receive each period and works out how long the money will last.
If the interest the principal earns in one period is at least as large as your payment, the balance never goes down. You are only spending the earnings, so the principal stays intact and the payments can continue indefinitely.
Payments are made at the end of each period, like an ordinary annuity. The balance earns interest for the whole period before each payment comes out. The annual growth rate is converted to the matching rate for the payout frequency you choose.
In a fixed payment payout, usually yes. The money rarely runs out on an exact payment date, so the final payment is whatever remains, including that period's interest. In a fixed length payout, every payment is the same.
No. It treats the payout as a fixed schedule and shows pre-tax figures. A life annuity from an insurer pays for as long as you live, which is a different product and is priced using life expectancy.
Pick another retirement tool to jump straight to it.