💰Annuity Calculator

About this tool

Choose whether to find the income a pot can pay or the pot needed for an income. Enter the growth rate while the money is being paid out, the number of years, and how much the income should rise each year for inflation. The calculator shows the monthly payment, the total paid out and how much of it came from growth, with a year-by-year table of the income and remaining balance.

How a drawdown annuity works

An annuity turns a lump sum into regular payments. In this drawdown model, the payment comes out at the start of each month and the remaining balance keeps growing at the rate you set, until the money runs out at the end of the period. A pot of 300,000 growing at 4% a year can pay about 1,270 a month for 25 years if the income rises 2% each year, or about 1,570 a month if it stays flat. Working the other way, a starting income of 1,500 a month rising 2% a year for 25 years needs a pot of roughly 354,000. Rising payments start lower but keep their buying power. Honest limits: the model assumes a steady return, whereas real markets vary and a run of poor years early on does the most damage. A lifetime annuity bought from an insurer works differently: it pays for as long as you live and is priced on life expectancy and interest rates, so get quotes. Tax is not included. Not financial advice. The retirement calculator plans the saving phase, the FIRE calculator finds a target number and the TVM calculator solves general cases. How to set a savings goal: the arithmetic, the interest, and the habits that make it stick helps set the target.

Frequently asked questions