👵 Fixed Annuity Monthly Payout Calculator
Monthly and annual income from a lump sum over a fixed term — plus real life-annuity quotes at 65 and the return you would need to match them yourself.
What Fixed Annuity Monthly Payout Calculator Does
This calculator models one specific annuity structure: a fixed-period annuity, also called a period-certain annuity. You hand over a lump sum, it earns a guaranteed interest rate, and it pays you a level amount every month until the balance reaches exactly zero at the end of a term you choose. There is no life expectancy involved and no insurer mortality table — the payout stops when the term ends, whether you are alive or not.
That makes it a different product from the "immediate annuity" or "income annuity" quotes that dominate searches like "how much will a $100,000 annuity pay per month". Those are life annuities: the insurer prices the payment using your age, sex and state, because the payout is guaranteed for as long as you live, however long that turns out to be. This tool has none of that data and does not pretend to. If you want lifetime income, a fixed-period calculator will always understate what an insurer would actually offer, because it is solving a different problem: amortizing a known sum over a known number of months, not underwriting an unknown lifespan.
The math itself is the same formula that prices a level-payment mortgage or an ordinary annuity loan payout, run in the direction of income rather than debt: PMT = P·r(1+r)ⁿ ÷ [(1+r)ⁿ − 1], with monthly compounding and n set from the term you enter. The interest rate you enter is treated as fixed for the full term — the calculator does not know, and cannot check, what rate an actual insurance carrier would credit; that number always has to come from the annuity contract or illustration in front of you.
How to Use Fixed Annuity Monthly Payout Calculator
- Enter initial lump-sum premium investment
- Input guaranteed annual interest rate percentage
- Choose payout duration in years to review monthly and lifetime income totals
Formula Used by Fixed Annuity Monthly Payout Calculator
Fixed-period monthly payout
PMT = P · r(1+r)ⁿ ÷ [(1+r)ⁿ − 1]
- P
- Lump-sum premium (initial investment), in dollars
- r
- Guaranteed annual rate ÷ 12 ÷ 100 — the monthly rate
- n
- Payout period in months (years entered × 12)
- PMT
- Level monthly payout that amortizes P to exactly $0 after n payments
Worked example
Premium P = $250,000, guaranteed rate 5.5% annually, term 20 years (this tool's own default inputs).
- r = 5.5 ÷ 100 ÷ 12 = 0.00458333
- n = 20 × 12 = 240 months
- (1+r)ⁿ = 1.00458333^240 = 2.99663 (rounded)
- PMT = 250,000 × [0.00458333 × 2.99663] ÷ [2.99663 − 1]
- PMT = 250,000 × 0.013735 ÷ 1.99663 = 1,719.72
Result: $1,719.72 per month for 240 months. Total paid out: $412,732.38. Total interest earned over the term: $162,732.38.
Tax-free portion of each payment (General Rule exclusion ratio)
Exclusion ratio = Investment in the contract ÷ Expected return; tax-free part = PMT × exclusion ratio
- Investment in the contract
- The premium you paid, P (assuming no basis reductions)
- Expected return
- Total of all payments you will receive: PMT × n
- Exclusion ratio
- The fixed percentage of every payment that is a tax-free return of your own principal
Worked example
Same default: P = $250,000, PMT = $1,719.72, n = 240 months, expected return = $412,732.38.
- Exclusion ratio = 250,000 ÷ 412,732.38 = 0.6057 (60.57%)
- Tax-free part of each payment = 1,719.72 × 0.6057 = $1,041.67
- Taxable interest part of each payment = 1,719.72 − 1,041.67 = $678.05
Result: Of every $1,719.72 payment, $1,041.67 (60.6%) is your own principal coming back tax-free and $678.05 (39.4%) is taxable interest — for the life of a non-qualified contract, until the full $250,000 basis is recovered.
Inflation-adjusted (real) value of a future payment
Real value = Nominal PMT ÷ (1 + i)^t
- i
- Assumed annual inflation rate
- t
- Years from the first payment
Worked example
Nominal PMT = $1,719.72, assumed inflation 3% per year.
- At year 10: 1,719.72 ÷ 1.03^10 = 1,719.72 ÷ 1.3439 = $1,279.63
- At year 20: 1,719.72 ÷ 1.03^20 = 1,719.72 ÷ 1.8061 = $952.17
Result: The check never changes — it is $1,719.72 every month for 20 years, exactly as the calculator promises. What it buys shrinks: by year 10 it has the purchasing power of $1,279.63 today (a 25.6% loss), and by the final payment in year 20, $952.17 (a 44.6% loss), at 3% annual inflation.
Monthly Payout by Term Length ($250,000 premium, 5.5% guaranteed rate)
Longer terms lower the monthly check but raise total interest earned, because the same principal is stretched over more payments while still compounding.
| Term | Monthly payout | Total paid out | Total interest |
|---|---|---|---|
| 10 years | $2,713.16 | $325,578.83 | $75,578.83 |
| 15 years | $2,042.71 | $367,687.55 | $117,687.55 |
| 20 years | $1,719.72 | $412,732.38 | $162,732.38 |
| 25 years | $1,535.22 | $460,565.62 | $210,565.62 |
| 30 years | $1,419.47 | $511,010.10 | $261,010.10 |
Tax-Free Principal vs. Taxable Interest, by Term ($250,000 at 5.5%)
Applying IRS Pub. 939's General Rule exclusion ratio to this tool's own output for a non-qualified contract. Shorter terms return principal faster, so a larger share of each payment is tax-free.
| Term | Monthly payout | Tax-free (principal) | Taxable (interest) | Exclusion ratio |
|---|---|---|---|---|
| 10 years | $2,713.16 | $2,083.33 | $629.82 | 76.8% |
| 15 years | $2,042.71 | $1,388.89 | $653.82 | 68.0% |
| 20 years | $1,719.72 | $1,041.67 | $678.05 | 60.6% |
| 25 years | $1,535.22 | $833.33 | $701.89 | 54.3% |
| 30 years | $1,419.47 | $694.44 | $725.03 | 48.9% |
Source: IRS Publication 939 — General Rule for Pensions and Annuities
What a life annuity pays on the same money, age 65
Live quotes on a $200,000 single-premium immediate annuity. These are insurer prices, not arithmetic: the payout rate is set by mortality tables and the rates available to the insurer on the day you buy, which is why none of them equals what this calculator returns.
| Payout option | Monthly income | As a % of premium each year | What happens when you die |
|---|---|---|---|
| Single life | $1,234 | 7.40% | Payments stop. Nothing to beneficiaries. |
| Life with 10-year period certain | $1,218 | 7.31% | If within 10 years, the rest of the 10 years goes to a beneficiary. |
| Joint life (both 65) | $1,112 | 6.67% | Continues in full while either spouse is alive. |
Source: Annuity.org annuity calculator, quoting Cannex (13 September 2026)
What you would have to earn to match the $1,234 quote yourself
Same $200,000, withdrawn monthly, ending at exactly $0. The longer you live, the higher the return you need — and at the end of every row the money is gone, while the annuity is still paying. Life expectancy is the median: half of 65-year-olds outlive it.
| You plan to age | Years | Return needed to pay $1,234/mo | What a 4% drawdown actually pays |
|---|---|---|---|
| 83 — male life expectancy at 65 | 18.1 | 3.39% | $1,296 (more than the annuity) |
| 86 — female life expectancy at 65 | 20.7 | 4.44% | $1,186 (4% less) |
| 90 | 25.0 | 5.55% | $1,056 (14% less) |
| 95 | 30.0 | 6.27% | $955 (23% less) |
How to Read Your Result
This is not a life annuity, and cannot be turned into one
The most common version of this search is "how much will a $100,000 annuity pay per month" — a question about a single-life or joint-life income annuity, priced by an insurer from mortality tables that account for your age and sex. This tool has no such data and cannot fake it. Plugging $100,000 in at 5.5% over 20 years returns $687.89 a month — a fixed-period number, not a life-income quote, and the two are not interchangeable. A life annuity for a 70-year-old will typically pay more per month than a 20-year period-certain annuity on the same premium, because the insurer is pooling longevity risk across many buyers rather than guaranteeing a fixed number of checks.
The guaranteed rate is an input, not a market quote
The "Guaranteed Interest Rate" field is whatever number you type — the rate stated in an actual annuity contract or illustration, or a rate you are testing. The calculator does not pull live rates from any carrier, so two contracts with the same premium and term can produce very different monthly payouts depending on the rate the insurer is actually crediting. Compare quotes from more than one carrier before assuming any single rate is representative.
Read the exclusion ratio before you count on the check as income
A non-qualified annuity (bought with after-tax money) is taxed under the IRS General Rule: part of each payment is treated as return of your own principal and is not taxed again, and part is treated as interest earned and is taxed as ordinary income. The exclusion ratio table above shows that split holds constant, payment after payment, for the length of the term. A qualified annuity — one held inside an IRA or 401(k) — works differently: because you never paid tax on the money going in, the entire payment is typically taxable as ordinary income when it comes out, with no exclusion ratio at all.
A level payment loses value in real terms
This calculator, like the contract it models, pays the same dollar amount every month for the whole term. It does not adjust for inflation. The worked example above shows a fixed $1,719.72 check is worth roughly a quarter less in purchasing power after 10 years and nearly half less after 20, at a steady 3% inflation rate. That erosion is invisible in the monthly number the tool displays and has to be planned around separately.
Why an insurer quotes more than this calculator does — the mortality credit
Run $200,000 through this tool at a realistic 4% over 20.7 years — a 65-year-old woman’s life expectancy — and you get about $1,186 a month, after which the account is empty. An insurer will quote a 65-year-old roughly $1,234 a month for life on the same $200,000. The insurer pays more and promises it for longer, which looks like it should be impossible. It is not: the insurer is pooling thousands of buyers, and the ones who die early leave money behind that funds the ones who live long. That subsidy is called the mortality credit, and it is the entire reason a life annuity can out-pay the arithmetic. No amount of investing skill reproduces it, because it is not a return — it is a transfer from the short-lived to the long-lived.
But the annuity is not automatically the better deal
This is where most pages selling annuities stop, and it is the wrong place to stop. Median life expectancy for a 65-year-old man is 18.1 years. Over that horizon, drawing the same $200,000 down at 4% pays about $1,296 a month — more than the $1,234 annuity quote, and you still own whatever is left. The annuity only pulls ahead if you live past roughly your life expectancy: it needs a 4.44% return to match at 20.7 years, 5.55% at 25, and 6.27% at 30. So the honest framing is not "which pays more" but "what are you buying". You are not buying a superior investment. You are buying insurance against the specific risk of living a long time and running out — and, as with any insurance, the expected value is against you and you buy it anyway because the downside it covers is one you cannot absorb.
What you give up, stated plainly
A life annuity is irreversible. Once annuitized, the premium is the insurer’s money and there is no account balance to withdraw, borrow against, or leave to anyone — a single-life contract pays nothing at all after your death, which is exactly why it quotes highest. Adding a 10-year period certain costs about $16 a month of income at these rates ($1,234 down to $1,218) and guarantees a beneficiary the rest of the decade; covering a spouse for life costs about $122 a month ($1,234 down to $1,112). Those are the real prices of the two protections people most often want, and they are small enough that refusing them to chase the headline number is usually the wrong trade.
Limitations & Accuracy Notes
- This is a fixed-period (period-certain) annuity calculator only. It has no mortality table and cannot compute a single-life, joint-and-survivor, or life-with-period-certain payout — the products actually being quoted by most "$100,000 annuity per month" search results. Do not use its output as a stand-in for a life annuity quote.
- The interest rate is a flat, unchanging input for the entire term. Real fixed annuity contracts can carry surrender charges, market-value adjustments, or a rate that steps down after an initial guarantee period — none of which this formula models.
- The tax split shown here follows the IRS General Rule for a non-qualified contract purchased with after-tax dollars. A qualified annuity held inside an IRA or employer plan is generally fully taxable on withdrawal, with no exclusion ratio; consult IRS Publication 939 and Publication 575, or a tax professional, before relying on any tax figure derived from this tool.
- An annuity is a contract with the issuing insurance company, not a bank deposit. It is not FDIC-insured. If the insurer becomes insolvent, state guaranty associations back the contract only up to a state-set limit — commonly $250,000 in present value of annuity benefits, per NOLHGA — not the full account value on a larger contract.
- The tool assumes premium, rate and term are entered correctly and performs no suitability, surrender-charge, or fee check. It has no field for a purchase already in payout (annuitized) status with an insurer-quoted rate that differs from what you enter here.
- It cannot price a life annuity, and nothing here should be read as a quote for one. A life payout depends on your age, sex, state, the payout option and the insurer’s rates on the day you buy — inputs this calculator does not have. The tables above show real quotes for comparison; the only number that binds is one an insurer gives you in writing.
Frequently Asked Questions
What is a Fixed Annuity?
How are annuity monthly payouts determined?
Are annuity payments guaranteed for life?
Is annuity income taxable?
What is the difference between an immediate and a deferred annuity?
What happens to the money when I die?
Why do annuity rates vary so much?
Is an annuity a good idea?
Is this financial advice?
References & Further Reading
- IRS — Annuities, a brief description — Defines "fixed period annuities" as their own IRS category, distinct from single-life, joint-and-survivor and variable annuities
- IRS Publication 939 — General Rule for Pensions and Annuities — Source of the exclusion-ratio formula: investment in the contract ÷ expected return
- IRS Publication 575 — Pension and Annuity Income — Confirms fixed-period annuities and the General Rule, and directs General Rule computations to Publication 939
- NOLHGA — FAQs: Product Coverage — States the commonly-applied $250,000 state guaranty association coverage limit, in present value of annuity benefits, for a fixed annuity
- SSA Actuarial Life Table — 2023 period life table — Life expectancy at 65: 18.12 years male, 20.66 years female. Used for the horizons in the break-even table — and it is a median, not a guarantee
- Annuity.org annuity calculator (quotes sourced from Cannex) — Live single-premium immediate annuity payouts for a $200,000 premium at age 65, read 13 September 2026