About the Annuity Payout Calculator
An annuity payout calculator works out how long a lump sum will last given regular withdrawals and an assumed return. It is the central question of retirement drawdown: will the money outlive you, or the other way round?
The formula
n = −log(1 − (B · r) / PMT) / log(1 + r)B is the starting balance, PMT the periodic withdrawal, r the periodic return. If the withdrawal is less than the interest earned, the balance never depletes.
How to use this calculator
- 1Enter your Starting Balance ($). The field starts at
500000, which you can overwrite. - 2Enter your Monthly Withdrawal ($). The field starts at
2500, which you can overwrite. - 3Enter your Annual Interest Rate (%). The field starts at
4, which you can overwrite. - 4Read the result straight away — it recalculates as you type, so there is no button to press. Use Share to copy a link that reopens the page with your exact numbers filled in.
Worked example
| Input | Value |
|---|---|
| Starting Balance ($) | 500000 |
| Monthly Withdrawal ($) | 2500 |
| Annual Interest Rate (%) | 4 |
Result
Lasts: 331 months (27.5 years)
Last Payment Age: funded to 27.5 years
Those are the values the page loads with, so you can reproduce this result yourself and then change one field at a time to see what drives the outcome.
Understanding your result
There is a threshold effect that surprises people. If your withdrawal is below the interest earned, the balance grows indefinitely and the money never runs out. Just above that point, depletion takes decades. Well above it, the balance can vanish in a few years — the relationship between withdrawal rate and longevity is highly non-linear near the threshold.
This calculation assumes a constant return, which retirement does not provide. Sequence of returns risk means a market decline in the early years is far more damaging than the same decline later, because withdrawals during a downturn sell more units to raise the same cash. Two retirees with identical average returns can have very different outcomes depending on the order those returns arrived.
Things worth knowing
- The 4 percent rule is the common starting point for a thirty-year retirement, though it is based on historical US data.
- Withdrawals need to rise with inflation to maintain purchasing power, which this fixed-payment model does not capture.
- A poor first few years of returns is the largest single threat to a drawdown plan.
- Flexible withdrawals — spending less after a bad year — substantially improve portfolio survival.
- Guaranteed income from social security or a pension reduces how much the portfolio must cover.
Frequently asked questions
How long will my retirement savings last?+
It depends on the withdrawal rate relative to returns. Withdrawing 4 percent annually has historically lasted about thirty years; withdrawing 8 percent typically depletes a portfolio in twelve to fifteen.
What withdrawal rate is safe?+
4 percent of the starting balance, inflation-adjusted, is the traditional guideline for a thirty-year horizon. Longer retirements or more conservative portfolios argue for 3 to 3.5 percent.
What is sequence of returns risk?+
The risk that poor returns early in retirement permanently damage the portfolio, because withdrawals during a downturn sell more assets. The same average return in a different order can produce a very different outcome.
Can my money last forever?+
If withdrawals stay below the return earned, the balance grows indefinitely. In practice inflation, variable returns, and rising spending make a truly perpetual drawdown difficult without a very low withdrawal rate.