Kim Borwick, Financial Editor for
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APA Borwick, K. (2022, June 20). Immediate Annuity Calculator. Retrieved June 21, 2022, from

MLA Borwick, Kim. "Immediate Annuity Calculator.", 20 Jun 2022,

Chicago Borwick, Kim. "Immediate Annuity Calculator." Last modified June 20, 2022.

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How Much Does a $100,000 Annuity Pay Per Month?

You can estimate the monthly payments from an annuity if you know the price of the annuity, the fixed interest rate, the frequency of your payments — monthly, quarterly or yearly — and the number of years the annuity will provide you with income.

For example, a 20-year fixed annuity with a principal amount of $100,000 and a 2 percent annual growth rate would generate a monthly income of roughly $505.

We stress the word “roughly” in this example because this estimate does not take into consideration the annuitant’s gender or pricing options such as caps, spreads and participation rates.

These are all unique to each annuity purchaser’s contract, and the insurance company will factor them into the equation when they set your rate. Furthermore, this calculation is accurate only if the annuity rate is fixed. It won’t work for variable annuities or other types of market-adjusted or inflation-adjusted annuities.

Wendy Swanson, Retirement Income Certified Professional™, explains how to estimate how much monthly income you might receive from an annuity over time.

How Do You Calculate Annuity Payments?

Calculating annuity payments can be tricky because insurance companies have the authority to set their rates and contract terms.

To get the best result from an annuity calculator, it helps to know the average annuity rates for the type of annuity you plan to buy.

In our example using the $100,000 principal amount at a 2 percent interest rate, we arrived at our estimated monthly payment amount by using a formula where:
  • PO = Principal
  • PMT = Monthly payment amount
  • r = Annual interest rate
  • n = Number of payments per year
  • t = Number of years of payments
Payout Annuity Formula

Using the data from our example, the formula allows us to calculate the monthly payments.

Payout Annuity Formula

Thus, at a 2 percent growth rate, a $100,000 annuity pays $505.88 per month for 20 years.

Remember: this example doesn’t include all the possible variables of individual annuity contracts, but having a firm grasp on this basic formula will make you more confident going intoa discussion with a financial planner or insurance agent.

Example of a $500,000 MYGA with a 2.85 Percent Interest Rate

In the case of a $500,000 multi-year guaranteed annuity with a 2.85 percent interest rate, the monthly payments for a 10-year period would be approximately $4,795.

Because MYGAs have fixed rates for a set number of years, we used the same formula in this example, but we plugged in different numbers for the principal (500,000), interest rate (2.85) and number of years (10).

Again, we haven’t taken contract specifics, such as gender or additional riders, into account because we don’t know exactly how the insurance company will weigh these. We do know, however, that women generally receive lower payments than men do because women have longer lifespans and that riders add to the price of an annuity.

How Do You Buy an Annuity?

  • Icon - Money Question - 64px
    Assess your current and future financial needs by talking to a financial advisor about your lifestyle and long-term goals.
  • Icon - Research - 64px
    Research the various types of annuities and decide which most suits your needs.
  • Icon - Rating - 64px
    Find a highly rated, reputable insurance company that offers a product that’s right for you at a competitive rate.
  • Icon - Writing - 64px
    Complete your application.

How Do Annuities Pay Out?

Annuities pay out incrementally on a consistent schedule that begins on the date specified in the contract.

When you assessed your financial needs, you should have determined whether you wanted your payments to begin within a year of purchase — in which case, an immediate annuity is the solution for you — or at a later date.

If you want your payments to begin later, tell the agent you are interested in a deferred annuity.

Whether your annuity pays out immediately or at some point in the future, the payments will occur on a schedule and will last as long as your contract specifies.

You will have the option of cashing out your annuity without penalty after the surrender period has elapsed, but be aware that doing so will undermine the annuity’s purpose of providing future income and tax deferral.

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: June 20, 2022

1 Cited Research Article writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.

  1. Lumen Learning. (n.d.). Payout Annuities: Mathematics for Liberal Arts. Retrieved from