Annuity Payout Calculator

Introduction

This Annuity Payout Calculator shows what happens when you draw a fixed amount from an invested balance each month while the remainder stays invested at an assumed return. Enter starting balance, monthly withdrawal, and expected return to see how long the money lasts or what balance remains after a set number of years. It answers decumulation questions for IRAs, brokerage accounts, and lump-sum pension rollovers without selling an actual insurance annuity contract. Results are sensitive to return and sequence of returns; treat them as structured estimates.

Who this calculator is for

Recent retirees or pre-retirees deciding whether $2,800 per month from a $500,000 IRA is sustainable. It also helps anyone on a fixed monthly draw from a taxable account who wants to know depletion year if markets disappoint. Financial independence followers testing a flat spending rule against a portfolio balance use it as a complement to percentage-based rules like four percent.

Accumulation with monthly deposits belongs in the Annuity Calculator. Employer pension annuity versus lump sum belongs in the Pension Calculator. Social Security reduces needed withdrawals; estimate benefits in the Social Security Calculator first.

What it estimates

Each period the model subtracts the withdrawal, then credits return on the remaining balance. Output may include years until zero balance, final balance after a stated horizon, and a year-by-year table of balance and cumulative withdrawals. Some versions flag when balance goes negative mid-year, indicating the payment exceeds sustainable income at that return.

Constant return hides bad early markets that accelerate depletion. Inflation on spending is not automatic unless you escalate withdrawals. Required Minimum Distributions from traditional IRAs may force higher withdrawals than your spending need; check the RMD Calculator for IRS floor amounts.

Inputs explained

Enter pretax withdrawal if the account is traditional IRA unless the form asks for net spendable dollars after estimated tax.

• Starting balance: Investable assets available to fund withdrawals at retirement start.
• Monthly withdrawal: Fixed dollar amount taken each month, not adjusted for inflation unless specified.
• Expected annual return: Average portfolio return during retirement; many planners use 4% to 6% for conservative mixes.
• Planning horizon (optional): Years to project if the tool shows remaining balance instead of depletion only.
• Inflation on withdrawals (optional): Annual increase in withdrawal amount if the form supports rising spending.

How to read the results

Years until depletion is the critical stress test for fixed withdrawals. If the balance lasts beyond age 95 at your assumed return, you have cushion. If money runs out at 82, you must cut spending, raise return assumption carefully, or add income like part-time work or delayed Social Security.

Compare monthly withdrawal to starting balance as a annualized rate: $2,800 times 12 is $33,600 on $500,000, or 6.7% before return, which is aggressive if return is only 4%. Lower withdrawal or higher return extends life. Cross-check with the Retirement Calculator replacement income target.

Worked example

Starting balance $500,000, monthly withdrawal $2,800, annual return 4%. Gross withdrawal rate is 6.7% of initial balance while return is 4%, so principal erodes over time. Depending on compounding, balance may deplete in roughly 18 to 22 years rather than lasting 30 years. First-year math: withdraw $33,600, earn about $20,000 on average balance, net drain near $13,000 of principal.

Cut withdrawal to $2,000 per month ($24,000 yearly, 4.8% initial rate) at 4% return and the account may last 30 years or more. Raise return to 6% with $2,800 monthly and depletion pushes toward mid-eighties to nineties. Sequence risk means real outcomes vary; run return at 3% as a stress case.

Practical use cases

Bridge spending from retirement at 62 until Social Security at 70: model IRA draw without SS, then reduce withdrawal mentally when SS starts. Lump-sum pension rolled to IRA: test spending against invested balance before buying commercial annuity. Part-time retirement: combine withdrawal with part-time net pay from the Take-Home Pay Calculator.

Required Minimum Distributions may exceed spending; reinvest surplus in taxable account rather than spending it. Coordinate RMD amounts with this payout model so you do not double-count.

Limitations and related tools

Does not model variable spending rules, guardrails, or dynamic withdrawal strategies. Taxes on traditional IRA withdrawals, capital gains in taxable accounts, and Medicare IRMAA thresholds are omitted. Insurance annuity income quotes with mortality pooling differ from self-managed drawdown.

See also Pension Calculator, RMD Calculator, IRA Calculator. Articles: retirement savings by age and tax planning strategies 2026.

How It Works

1. Enter portfolio balance. Type total investable assets earmarked for this withdrawal stream.
2. Set monthly withdrawal. Enter the fixed monthly amount you plan to spend from the account.
3. Pick expected return. Use a conservative long-run return for your stock-bond allocation.
4. Check depletion or ending balance. Calculate and read years until zero or balance at your horizon. Stress-test at one point lower return.

Formula and methodology

The Annuity Payout Calculator uses this identity for the scenario you enter. A bank, payroll system, or tax program may round on a 360-day year or average daily balance, so a statement can differ by a small amount.