Immediate Annuity Calculator
Estimate what your monthly payments might be from an immediate annuity.
How the immediate annuity calculator works
It treats your lump-sum premium as the present value of an income stream and solves for the level monthly payment it can fund over your chosen payout period at the annuity rate.
Worked example: with lump-sum premium of $250,000, annuity rate of 4.50% and payout period (years) of 20, the immediate annuity calculator shows guaranteed monthly income of $1,581.62.
- Monthly income
- $1,581.62
- Annual income
- $18,979
- Total paid out
- $379,590
- Interest earned
- $129,590
The formula
Monthly income = premium annuitized: premium × r ÷ (1 − (1 + r)⁻ⁿ), where r is the monthly rate and n the payout months.
Results are estimates for educational purposes and are not financial advice. Confirm exact figures with your lender, plan administrator or advisor.
Questions about the immediate annuity calculator
What is an immediate annuity?
You hand an insurer a lump sum and they begin paying you a guaranteed income right away — for a set period or for life. It converts savings into a predictable paycheck.
What is the trade-off?
You give up access to and control of the principal in exchange for guaranteed income. It removes market and longevity risk but is largely irreversible.
When does an immediate annuity make sense?
For retirees who want to cover essential expenses with guaranteed income they cannot outlive, complementing Social Security and pensions.
Is the Immediate Annuity Calculator free to use?
Yes. Every calculator on FinCalculators is completely free, with no sign-up, login or paywall. You can run as many scenarios as you like.