⚡ Immediate Annuity Calculator
Calculate immediate annuity payouts
Lump sum payment to purchase the immediate annuity
Years of payouts (or select lifetime)
How to Use This Calculator
Enter Principal Amount
Input the principal amount - the lump sum you pay to purchase the immediate annuity. Payouts typically begin within 12 months of purchase.
Enter Interest Rate and Payout Period
Enter the annual interest rate and the number of years over which payouts will be made. For lifetime annuities, use your life expectancy or consult an insurance professional.
Select Payout Frequency
Select how often you'll receive payments: monthly (most common), quarterly, semi-annually, or annually.
Review Payout Amount
See the periodic payout amount, annual payout, total payout over the period, and total interest. Use this to understand immediate annuity income.
Formula
Periodic Payment = Principal × (r / m) / [1 - (1 + r / m)^(-n)]
Where:
• Principal = Lump sum payment for annuity
• r = Annual interest rate
• m = Number of payments per year
• n = Total number of payments
Example Calculation:
If principal $100,000, rate 5%, payout 20 years, monthly:
• Monthly rate = 5% ÷ 12 = 0.4167%
• Total payments = 20 × 12 = 240
• Monthly payout: ~$660
• Annual payout: ~$7,920
• Total payout: ~$158,400
About Immediate Annuity Calculator
An immediate annuity calculator helps you calculate the periodic payout amount you'll receive from an immediate annuity. Immediate annuities are annuity contracts where you pay a lump sum upfront and begin receiving payments soon after purchase (typically within 12 months). Immediate annuities provide guaranteed income and are often used in retirement to convert a lump sum into a steady stream of payments. This calculator shows you how much you'll receive per payment period based on the principal, interest rate, and payout period.
When to Use This Calculator
- Retirement Planning: Convert lump sum to guaranteed income
- Income Planning: Plan for steady retirement income
- Annuity Comparison: Compare immediate annuity options
- Payment Estimation: Estimate periodic payment amounts
Understanding Immediate Annuities
- Lump Sum Purchase: Pay a single amount upfront
- Quick Payouts: Payouts begin soon after purchase (within 12 months)
- Guaranteed Income: Provides guaranteed payments for specified period or life
- Fixed Payments: Payments are typically fixed (some offer inflation adjustments)
Why Use Our Calculator?
- ✅ Payout Calculation: See exact periodic payment amount
- ✅ Income Planning: Plan for guaranteed retirement income
- ✅ Comparison: Compare different immediate annuity options
- ✅ Budget Planning: Plan your budget around annuity income
- ✅ 100% Free: No registration or payment required
Frequently Asked Questions
What is an immediate annuity?
An immediate annuity is an annuity contract where you pay a lump sum upfront and begin receiving payments soon after purchase (typically within 12 months). Immediate annuities provide guaranteed income for a specified period (e.g., 10, 20 years) or for life. They're often used in retirement to convert a lump sum into a steady stream of payments.
What's the difference between immediate and deferred annuities?
Immediate annuities begin payouts soon after purchase (within 12 months), while deferred annuities have an accumulation period (typically 10-20 years) before payouts begin. Immediate annuities are for current income needs, while deferred annuities are for future income needs. During the deferral period of a deferred annuity, the principal grows with interest.
Should I buy an immediate annuity?
Immediate annuities can be suitable for retirees who want guaranteed income and are willing to give up liquidity for security. Benefits include guaranteed payments, protection from market volatility, and predictable income. However, consider: loss of principal (you can't get it back), lower returns than stocks, fees, and limited flexibility. Evaluate your goals, risk tolerance, and other income sources before purchasing.
Are immediate annuity payouts taxable?
Immediate annuity payouts are typically taxable as ordinary income, except for the portion that represents return of principal. With a qualified annuity (funded with pre-tax dollars like a 401k rollover), all payouts are taxable. With a non-qualified annuity (funded with after-tax dollars), only the interest portion is taxable. Consult a tax professional for advice on your specific situation.