Annuity Income Calculator
Annuity Income
Calculate the monthly income you can expect from a fixed or immediate annuity based on your lump sum investment, interest rate, and payout period.
Formula
Monthly Payment = (Lump Sum x Monthly Rate) / (1 - (1 + Monthly Rate)^(-Total Payments)); Monthly Rate = Annual Rate / 12; Total Payments = Payout Years x 12
Frequently Asked Questions
What is an immediate annuity?
An immediate annuity is a contract where you pay a lump sum to an insurance company and begin receiving regular income payments right away, typically within 30 days. Payments can be fixed or variable and can last for a set period or for life.
Are annuity payments taxable?
Part of each annuity payment from a non-qualified annuity is a tax-free return of principal, while the earnings portion is taxed as ordinary income. Qualified annuity payments from IRAs or 401k plans are fully taxable as ordinary income.
What is the difference between fixed and variable annuities?
Fixed annuities provide guaranteed periodic payments at a set interest rate. Variable annuities invest in subaccounts similar to mutual funds, and payments fluctuate based on investment performance.
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