Annuity Payout Calculator — what a balance can pay, and for how long

How it works

Two questions, one mechanism. The sustainable draw: W = P·r(1+r)ⁿ ⁄ ((1+r)ⁿ − 1) — the amortization formula with the roles reversed, since a bank's loan is exactly a payout annuity it bought from you. The duration: at your own withdrawal, each month adds interest on the remainder and subtracts the draw until the balance reaches zero, with an honest boundary — a withdrawal at or below one month's interest (balance × rate ÷ 12) never touches principal, and the page says "forever" rather than inventing a number. The horizon sweep shows the retirement trade directly: stretching the same balance over more years lowers the monthly draw but raises the total paid out, because the remainder earns longer.

Worked example

The arithmetic is a published pair read in the payout direction: LibreTexts works "Jordan can afford $400 per month" at 12% for 4 years to a present value of $15,189.58 — which, read from this page's side, says a $15,189.58 balance at 12% sustains exactly $400 a month for 48 months. On the default inputs — $300,000 earning 5% over 25 years — this calculator's same formula supports about $1,754 a month, while the entered $1,500 draw lasts well past the horizon: its own computation for these inputs, anchored on the published pair.

Frequently asked questions

How much can my savings pay me per month?

The sustainable-withdrawal output: the level draw that exhausts the balance exactly at your horizon, from the amortization formula. On $300,000 at 5% over 25 years that is about $1,754 a month — and the sweep shows how the figure moves at 15, 20, 25, and 30 years on your own numbers.

How long will my money last at my withdrawal?

The duration output simulates it month by month: interest lands on the remainder, your withdrawal comes out, and the months are counted until zero. The relationship is sharply non-linear near the interest line — a draw just above the monthly interest lasts a very long time, and one at or below it lasts forever.

Why can a withdrawal last forever?

If the draw never exceeds the interest the remainder earns, the principal is never touched — a perpetuity. On $300,000 at 5%, monthly interest starts at $1,250: any withdrawal at or under that leaves the balance intact, which the page reports honestly instead of showing a number.

Is this how retirement withdrawals work?

It is the fixed-rate core of them. Real retirement drawdowns add market volatility, inflation-adjusted withdrawals, and sequence-of-returns risk — none of which a constant rate models. Treat the output as the arithmetic skeleton: what a steady return would support, not what markets promise.

Why does a longer horizon pay out more in total?

Because the remainder earns for more months: stretching $300,000 from 15 to 30 years roughly halves the monthly draw but raises the sum of all draws, the interest working longer. The sweep prices that trade for your balance and rate.

How is this related to the loan calculators?

It is the same formula from the other chair: a lender's loan is a payout annuity bought with the principal. That is why the published loan pairs — payment, rate, term, present value — verify this page's arithmetic exactly, just read in the opposite direction.

How accurate is this, and what does it exclude?

Exact for a constant rate and fixed monthly draws. It excludes market volatility, inflation (a fixed draw buys less each year), taxes on withdrawals, fees, and annuity-product pricing — an insurer's quoted annuity embeds mortality pooling and margins this arithmetic does not model.