Annuity Payout Calculator: How Much Will a Lump Sum Pay Each Month?

Name: Annuity Payout Calculator: How Much Will a Lump Sum Pay Each Month?
Author: Acun Özdilek

This annuity payout calculator shows the level monthly income a lump sum can pay: $300,000 from age 67 pays about $1,753 a month for 21 years and 2 months, the IRS life expectancy at that age, if the money left earns 4% a year.

Example numbers

The answerfrom an example

$300,000 pays $1,752.68 a month for 21.2 years, the IRS life expectancy at age 67, if the money left earns 4.00% a year.

Worked on $300,000 from age 67 over the IRS life expectancy, at a 4% return. Change anything below to use yours.

Monthly income: $1,752.68
Paid out in total: $445,182
Earned on the money left: $145,182

The figures behind it

Monthly income: $1,752.68; Paid at the end of each month, the same amount every month. The last payment can differ slightly because of rounding.
Paid out in total: $445,182; Every payment added up, before tax.
Earned on the money left: $145,182; Total paid out minus the lump sum.
IRS life expectancy at 67: 21.2 years; From the IRS Single Life Expectancy Table (Publication 590-B, Table I, for beneficiaries). It is an average, and many people live longer. Income planned to end there stops while they are still alive.

Payment scheduleShow

Age	Paid that year	Earned that year	Left at year end
67	$21,032	$11,833	$290,800
68	$21,032	$11,458	$281,226
69	$21,032	$11,068	$271,261
70	$21,032	$10,662	$260,891
71	$21,032	$10,239	$250,098
72	$21,032	$9,799	$238,865
73	$21,032	$9,342	$227,175
74	$21,032	$8,866	$215,008
75	$21,032	$8,370	$202,346
76	$21,032	$7,854	$189,168
77	$21,032	$7,317	$175,453
78	$21,032	$6,758	$161,179
79	$21,032	$6,177	$146,324
80	$21,032	$5,572	$130,863
81	$21,032	$4,942	$114,773
82	$21,032	$4,286	$98,027
83	$21,032	$3,604	$80,598
84	$21,032	$2,894	$62,460
85	$21,032	$2,155	$43,583
86	$21,032	$1,386	$23,936
87	$21,032	$585	$3,489
88	$3,507	$17	$0

What this result assumes

An insurance company's quote will differ. An insurer prices an income annuity with its own mortality tables, interest rates, fees and commissions, and a life annuity keeps paying if you outlive the period shown here. Get a written quote and compare it with this figure.
Here you keep the money and draw it down. If you die early, what is left goes to your heirs. If you live past the end, the income stops. A life annuity works the other way round: it pays for as long as you live, and unless you pick a period-certain or refund option, payments stop at death.
An annuity is only as safe as the insurer. Its promises depend on the company's financial strength and claims-paying ability.
The return is the same every year. The figures are before tax and not adjusted for inflation.

An insurance company's quote will differ, because it prices with its own mortality tables, fees and guarantees. Choose a set number of years instead, and see the balance left each year.

Methodology

Reviewed October 6, 2026 by Acun Özdilek

How the monthly income is worked out

The calculator uses the level-payment formula, the same one behind a loan payment, seen from the lender’s side. The lump sum is the balance. Each month it earns one twelfth of the yearly return, then one payment comes out at the end of the month. The payment is set so the last one brings the balance to zero, and that last payment can differ slightly because every month is rounded to the cent.

The amortization calculator shows the same math as a loan you pay off. If you already have a pension offer, the pension lump sum calculator judges whether the lump sum can match it. The retirement calculator applies one withdrawal rate to a balance instead of spending it down to zero.

The life expectancy option

This option pays the money out over the IRS single life expectancy at the age you enter, rounded to the nearest month. The figure comes from Table I of IRS Publication 590-B, the table the IRS gives beneficiaries for inherited accounts. At 67 it is 21.2 years, so the payments run for 254 months.

The table gives an average, and many people live longer. Income planned to end at that age stops while they are still alive, so it works as a planning horizon, not a forecast.

What the page leaves out

It does not price an annuity from an insurance company. An insurer pools longevity risk across many buyers and charges fees and commissions, and its quote will differ. The page also leaves out tax on the payments, inflation and cost-of-living increases, returns that change from year to year, payments at the start of each month, and joint payouts for a couple.

Assumptions

Payments are the same every month and come at the end of the month.
The money left earns the same return every year.
Figures are before tax and not adjusted for inflation.
The life expectancy option uses IRS Publication 590-B Table I at the age entered.

Sources

Common questions

How is an annuity payout calculated?

Take the lump sum, the yearly return and the number of months, and find the one payment that, taken every month while the rest keeps earning, brings the balance to zero at the end. $300,000 paid out over 20 years at 4% a year gives $1,817.94 a month. A higher return or a shorter period raises the payment.

Why use the IRS life expectancy table?

It is a published, dated table that does not depend on any insurer, so it gives a neutral horizon. It is an average, though, and many people live longer, so a plan that ends there leaves out everyone who outlasts it. The Social Security claiming age calculator shows income that lasts for life.

Will an insurance company pay me the same amount?

Not likely. An insurer pools longevity risk: buyers who die early help pay for those who live long, which is how a life annuity can pay for as long as you live. Its quote uses its own mortality tables and interest rates, and FINRA notes that annuities carry fees such as mortality and expense risk charges and administrative fees, and can have high commissions. A written quote shows the real figure to set beside this one.

What happens if I live longer than the payout period?

The income stops when the money runs out. That is the risk a life annuity takes off you. The trade is that the insurer’s payment may be smaller, and nothing is left for heirs after death.

What happens to the money if I die early?

Here, whatever is left stays yours and can go to your heirs. With a life-only annuity, payments stop at death. Options such as period-certain or a refund change that, and the SEC’s Investor.gov notes that income can be paid for the rest of your life, the life of your spouse or partner, or some other set period of time. An annuity’s promises are also subject to the insurer’s financial strength and claims-paying ability.

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Result