About the Annuity Payout Calculator

An annuity is a financial product that can provide a reliable stream of income, typically during retirement. After you've saved money in an annuity during its "accumulation phase," you enter the "payout phase." This calculator is designed to help you understand this second phase, allowing you to either calculate how much you can withdraw periodically or how long your funds will last based on a desired withdrawal amount.

Key Terms Explained

• Starting Principal: The total amount of money in your annuity when you begin to take payments.
• Interest/Return Rate: The rate at which your remaining annuity balance is expected to grow, even during the payout phase.
• Payout Frequency: How often you receive payments—typically monthly, quarterly, or annually.
• Fixed Length Payout: You decide how many years you want the payments to last, and the calculator determines the fixed amount you'll receive per period.
• Fixed Payment Payout: You decide on a fixed payment amount, and the calculator determines how long your annuity funds will last.

Frequently Asked Questions (FAQ)

What is the difference between this and a regular annuity calculator?

A regular Annuity Calculator typically focuses on the accumulation (savings) phase, showing how your money will grow over time. This Annuity Payout Calculator focuses on the distribution (spending) phase, showing how you can turn your accumulated savings into a steady income stream.

What happens if I outlive my annuity?

This is a key risk. If you choose a "period certain" or "fixed length" payout and live longer than that period, your payments will stop. To avoid this, many people choose a "lifetime" payout option (not modeled by this calculator) from their insurance provider, which guarantees payments for as long as you live, though often at a lower monthly amount.

Are annuity payouts taxable?

Yes. For non-qualified annuities (purchased with after-tax money), the portion of each payout that represents investment earnings is taxed as ordinary income. The portion that is a return of your original principal is not taxed.