How much income can a lump sum pay?
Enter a starting balance, the return it earns while you draw it down, and the number of years the money must last. The calculator finds the equal monthly payment that uses up the balance exactly at the end, the same math lenders use for loan payments, run in reverse. It also shows how much of the total comes from interest.
You can also enter the monthly amount you want and see how long the money would last. If the interest alone covers your withdrawals, the balance never runs out.
Ways to turn savings into income
- Systematic withdrawals – sell investments each month or year as needed. You keep control, but returns can vary.
- The 4% guideline – withdraw about 4% of your savings in the first year of retirement and adjust for inflation after that, a starting point for a 30-year retirement.
- Income annuity – an insurer pays you a guaranteed amount for life in exchange for a lump sum. You give up access to the money.
Frequently asked questions
What is the difference between a period-certain and a lifetime annuity?
A period-certain annuity pays for a fixed number of years, like this calculator. A lifetime annuity pays as long as you live, so the payment depends on your age and life expectancy when you buy it.
Are annuity payouts taxed?
If the annuity was bought with after-tax money, only the earnings part of each payment is taxed. Payouts from an IRA or 401(k) are fully taxable as income.
Should I account for inflation?
Yes. A fixed payment buys less every year. Use a lower return to leave room for raising withdrawals over time.