Fixed Annuity Payout Calculator

Funded balance:

Contract value available when the modeled payout starts.

Payout term:

years

Choose 1 to 50 whole years.

Annual effective credited rate:

% / year

Enter 5 for a 5% annual effective rate.

Payment frequency:

Match the scheduled income frequency in the current illustration.

Payment timing:

Choose the posting order stated by the contract.

Fee per payment:

The neutral default is $0.00.

Desired residual balance:

The neutral default is $0.00, which exhausts the modeled balance.

Term-certain payout schedule in US dollars
Payment	Opening balance	Interest credited	Payout received	Fee	Account deduction	Ending balance	Copy
{{ row.label }}	{{ formatMoney(row.opening_balance) }}	{{ formatMoney(row.interest_credited) }}	{{ formatMoney(row.payout_received) }}	{{ formatMoney(row.fee) }}	{{ formatMoney(row.account_deduction) }}	{{ formatMoney(row.ending_balance) }}

Contract review

Schedule reconciliation

These values come from the same canonical schedule shown in the other tabs.

Ready to compare

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Calculation method

Full precision is carried through the schedule and rounded only for display.

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What this models

A level term-certain payout from one funded balance using a constant annual effective rate, selected posting order, fixed per-payment fee, and optional residual.

What to verify

Match the current contract's rate period, fees, payment timing, guarantees, tax treatment, and rounding before relying on the comparison.

Important limit

This is not an insurer quote or a life-contingent calculation. It does not model mortality credits, joint-life benefits, riders, indexed returns, renewal rates, or surrender rules.

A fixed annuity can turn a contract value into regular income, but the word fixed does not describe every part of the contract. It may refer to a credited interest rate, a stated payout amount, or both. Rates can also change after a guarantee period. A useful payout estimate therefore begins with the exact contract value and rate that apply when payments start.

A term-certain payout lasts for a chosen number of years. It differs from a life-contingent annuity, which depends on one or more lives and can include mortality credits, survivor choices, refund provisions, or riders. Term-certain arithmetic answers a narrower question: how large can each level payment be if a funded balance earns a stated rate and reaches a chosen ending balance after a fixed number of payments?

Funded balance: The contract value assigned to the payout schedule, not an income-benefit base or surrender value unless the contract says they are the same.
Credited rate: The annual effective rate assumed during the payout term. It must not be replaced with an index cap, participation rate, or rider roll-up rate.
Payment timing: End-of-period payments receive a period of interest before each deduction. Beginning-of-period payments deduct first, so less money remains to earn interest.
Residual balance: The modeled contract value after the final payment. It is not automatically a death benefit, cash-refund guarantee, or amount available on surrender.

Payment frequency changes both the number of deductions and the rate used for each period. A 5% annual effective rate is not divided by 12 for monthly payments; it is converted to an equivalent monthly rate that compounds back to 5% over a year. Fees also matter because the account deduction can exceed the cash received by the fixed fee charged with each payment.

The resulting schedule is a contract-comparison estimate, not an insurer quote or investment recommendation. It does not value lifetime income, taxes, surrender charges, changing renewal rates, inflation protection, insurer financial strength, or rider terms. Those features can be more consequential than a small difference in the modeled payment.

How to Use This Tool:

Copy one internally consistent set of assumptions from the current contract or illustration, then compare the calculated schedule with the insurer's figures.

Enter the Funded balance available when the modeled payout begins and choose a whole-year Payout term.
Enter the Annual effective credited rate. Use the rate that applies to this payout value and term, not a separate accumulation or rider rate.
Select the contract's Payment frequency and Payment timing. Beginning and end timing produce different schedules even when every other assumption matches.
Open Advanced only when the contract specifies a Fee per payment or when you want to preserve a Desired residual balance. Leave either at zero when it does not apply.
If the payout is withheld, reduce the fee or residual, increase the funded balance or rate, or extend the term. The schedule requires a positive cash payout after the fixed fee.
Compare Estimated payout per payment, total fees, interest credited, and ending balance with the insurer's current illustration before relying on the result.

Interpreting Results:

The headline payout is the cash received each period. The account deduction is larger by the entered fee, so use the payout for income planning and the deduction when reconciling the contract balance. Total payouts plus total fees do not have to equal the starting balance because credited interest also funds the schedule.

Periodic rate confirms how the annual effective rate was converted for the selected frequency.
Ending balance should match the desired residual, subject only to tiny floating-point reconciliation differences before display rounding.
Balance path shows how timing changes the amount that remains invested before interest is credited.
Total fees is the fixed fee multiplied by the payment count; it excludes any charge not entered in the assumptions.

A close match supports only the stated term-certain assumptions. It does not confirm that the contract guarantees the entered rate for the full term or that the insurer uses the same posting order, day-count method, per-payment rounding, or treatment of residual value.

Technical Details:

The schedule is an accumulated-value form of a level annuity. It first converts the annual effective credited rate to an equivalent rate per payment period, then solves for the constant account deduction that carries the funded balance to the desired residual.

Formula Core:

Let B be the funded balance, j the annual effective rate as a decimal, m payments per year, y the payout years, R the desired residual, F the fee per payment, D the account deduction, and P the payout received.

\begin{array}{rcl} i & = & {(1 + j)}^{\frac{1}{m}} - 1 \\ n & = & m y \\ D & = & \frac{B {(1 + i)}^{n} - R}{s_{n} T} \\ P & = & D - F \end{array}

For a nonzero periodic rate, the accumulation factor is s_n = ((1 + i)ⁿ − 1) / i. At a zero rate it is exactly n. The timing factor T is 1 for end-of-period payments and 1 + i for beginning-of-period payments.

Fixed annuity formula quantities and schedule treatment
Quantity	Treatment	Why it changes the payout
Annual effective rate	Converted so (1 + i)^m = 1 + j	Preserves the entered annual growth across payment frequencies.
Beginning timing	Deduction occurs before interest	Each deduction leaves less balance earning interest for that period.
End timing	Interest occurs before deduction	The opening balance earns a full period before each payment.
Fixed fee	Added to every account deduction	Reduces the cash payout without reducing the balance removed.
Residual	Reserved after the last period	Reduces the amount available to support current payments.

Full precision is carried through the formula and schedule. Currency is rounded for display, while the final unrounded balance is reconciled to the entered residual when the difference is within max($0.0000001, funded balance × 10⁻¹²).

Limitations:

This model holds one credited rate constant and treats the payout as a fixed term-certain depletion schedule.

It excludes lifetime and joint-life guarantees, mortality credits, refund choices, income riders, and death benefits.
It does not model indexed or variable returns, renewal-rate changes, market-value adjustments, surrender charges, or taxes.
The desired residual is only a mathematical ending value unless the contract gives it a legal or benefit meaning.
Insurer guarantees depend on the issuing insurer's claims-paying ability and the exact contract terms.

Worked Examples:

Two annual payments with a residual

A $2,000 balance, two-year term, 5% annual effective rate, end-of-year timing, $20 fee, and $155 residual produce a $1,000 account deduction each year. The cash payout is $980 after the fee. The schedule credits $100 in year one and $55 in year two, then ends at the $155 residual.

References:

Annuities, Financial Industry Regulatory Authority.
Buyer's Guide to Fixed Deferred Annuities, National Association of Insurance Commissioners, 2022.
Complete Annuities, Society of Actuaries, 1952.