What are the payments on an immediate annuity?

To minimize investment risk, it might make sense to invest a lump sum amount with an insurance company. In return, the insurance company will send you monthly payments over a specified time period. Use this calculator to estimate those monthly payments given a specified interest rate. Note: actual payments my vary due to administrative and investment management fees.

Input

Principal amount to annuitize ?

The lump sum you hand over to the insurer to start the annuity.

Annual interest rate ?

The rate the insurer credits while paying out your principal.

Monthly payment periods ?

How many months the annuity will pay you before it is exhausted.

Enter your values and select Calculate.

The monthly payment figure is what the insurer would owe you each month if it credits the interest rate you entered for the entire term. It does not include any fees the insurer might charge, taxes on the income portion of each payment, or the effect of inflation on what that fixed check can buy ten or twenty years from now.

The principal amount and the interest rate move this number the most. A larger principal scales the payment up directly, while a higher assumed rate lets a smaller principal produce the same payment, or a given principal produce a larger one, because more of the payout is treated as interest rather than a return of your own money. The length of the payment period matters too: stretching payments over more months lowers each check but raises the total payout, since more interest accrues along the way.

Real annuity contracts vary by insurer, may include optional riders, death benefits, or inflation adjustments, and are priced using mortality tables and rates that shift over time. This calculator assumes a level rate and a fixed schedule, so treat the total payout as an illustration of the math rather than a quote.

If you're comparing this against other income options, such as a bond ladder or a different annuity term, it's worth rerunning the numbers whenever the quoted rate changes or before you commit any principal, and bringing the results to a financial advisor who can factor in your taxes and other income. Having a concrete estimate to start from, even a rough one, is most of the work.

This information may help you analyze your financial needs. It is based on information and assumptions provided by you regarding your goals, expectations and financial situation. The calculations do not infer that the company assumes any fiduciary duties. The calculations provided should not be construed as financial, legal or tax advice. In addition, such information should not be relied upon as the only source of information. This information is supplied from sources we believe to be reliable but we cannot guarantee its accuracy. Hypothetical illustrations may provide historical or current performance information. Past performance does not guarantee nor indicate future results.