Annuity Payout Calculator
With lump sum 500000 usd, annual return while it pays out 4.5 percent, years of payments 20 years, annuity payout comes to $3,163.25 — monthly payment. It is reached in 5 steps, the last of which is 500000 * 0.00375 / (1 - pow(1 + 0.00375, -240)), and each one is printed on the page with its numbers filled in. The formula is the one published by US SEC Investor.gov, not an approximation fitted to it.
The monthly income a lump sum pays out over a fixed number of years at a given return, and how much of that income is interest rather than your own capital.
Formula and sources checked · How we check
Lump sum 500000, Annual return while it pays out 4.5, Years of payments 20 years
$3,163.25
Monthly payment for the example below. Editing a field recomputes the calculator below; this figure holds the answer the page was loaded with.
It is written into the HTML rather than drawn by a script, so a search engine reading this page without running JavaScript still finds an answer.
- Monthly payment
500000 * 0.00375 / (1 - pow(1 + 0.00375, -240))$3,163- A year of it
3163.2469 * 12$37,959- Paid out over the whole term
3163.2469 * 240$759,179- Of that, interest
759179.25 - 500000$259,179- Monthly income if you never touch the capital
500000 * 0.00375$1,875
Ask about this in the chatCompare: ten more years of payments
Balance while it pays out
| Year | Balance left |
|---|---|
| Year 1 | $484,218.18 |
| Year 2 | $467,711.34 |
| Year 3 | $450,446.18 |
| Year 4 | $432,387.86 |
| Year 5 | $413,499.95 |
| Year 6 | $393,744.33 |
| Year 7 | $373,081.14 |
| Year 8 | $351,468.69 |
| Year 9 | $328,863.36 |
| Year 10 | $305,219.55 |
| Year 11 | $280,489.55 |
| Year 12 | $254,623.46 |
| Year 13 | $227,569.08 |
| Year 14 | $199,271.83 |
| Year 15 | $169,674.60 |
| Year 16 | $138,717.69 |
| Year 17 | $106,338.62 |
| Year 18 | $72,472.06 |
| Year 19 | $37,049.68 |
| Year 20 | -$0.00 |
The table above groups the 240 months into 20. The amortisation schedule prints every one of them, with the split between interest and principal.
Worked example
$500,000 at 4.5% paid out over 20 years gives $3,163.25 a month, and the last payment empties the account. Over the full term it pays $759,179, of which $259,179 is interest earned while the balance was being drawn down. Never touching the capital would pay $1,875 a month instead, for ever.
How to work it out yourself
- 1.This is a fixed-period payout: the balance earns the rate you set and is drawn down to nothing on the last payment. A life annuity from an insurer works differently — it pays until you die, and the price of that promise is a lower payment and no residue for heirs.
- 2.The interest-only line is the payment that would leave the capital intact for ever. The gap between it and the payment above is how fast the pot is being consumed.
- 3.Nothing here is indexed to inflation. A payment fixed in 2026 dollars for 20 years buys roughly half as much at the end of it if prices rise 3% a year.
Monthly payment from $500,000 at 4.5%
| Years of payments (years) | Monthly payment | Paid out over the whole term | Of that, interest |
|---|---|---|---|
| 10 | $5,181.92 | $621,830 | $121,830 |
| 15 | $3,824.97 | $688,494 | $188,494 |
| 20 | $3,163.25 | $759,179 | $259,179 |
| 25 | $2,779.16 | $833,749 | $333,749 |
| 30 | $2,533.43 | $912,034 | $412,034 |
| 35 | $2,366.28 | $993,839 | $493,839 |
The formula
- Monthly payment
500000 * 0.00375 / (1 - pow(1 + 0.00375, -240)) - A year of it
3163.2469 * 12 - Paid out over the whole term
3163.2469 * 240 - Of that, interest
759179.25 - 500000 - Monthly income if you never touch the capital
500000 * 0.00375
Questions people actually ask
- How much monthly income will $500,000 give me?
- Spread over 20 years at 4.5% it pays $3,163 a month and ends at zero. Left untouched at the same rate it throws off $1,875 a month for ever. Which of those you want is the whole decision: the first is nearly 70% more income, the second leaves the capital behind.
- Is this what an insurance company would pay me?
- No. An insurer quotes a life annuity, priced on mortality tables and its own margin, and typically pays less per month than this arithmetic for the same money — in exchange for never running out, however long you live.
- What return should I assume?
- Money you are spending down over a fixed term is usually held conservatively, so a bond-like rate is the honest input. Assuming an equity return on a pot you are drawing from ignores that a bad first few years permanently shrinks the payments.
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Part of a job
- Planning retirement — 9 pages, in the order the questions arrive
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