Does this model inflation?

No. Payouts are nominal. To model inflation, you could reduce the real payout target or adjust spending separately.

Is this like an annuity?

It uses a similar math framework for level payments, but it does not include insurance features or guarantees. Actual annuities also price in mortality and fees.

What if returns are volatile?

This assumes a steady average return. Real markets fluctuate; revisiting your plan and using more conservative assumptions can help manage risk.

finance calculator

Retirement Payout Calculator

Calculate a fixed monthly payout from a retirement balance over a set number of years with an assumed annual return, plus total paid and interest portion.

Results

Monthly payout: $2,639
Total paid over term: $791,755
Interest portion: $291,755

How to use this calculator

Enter retirement balance and expected annual return during withdrawal.
Enter years to pay out.
Review monthly payout, total paid, and interest portion.
Adjust years or return to see how payout size and total interest change.

Inputs explained

Retirement balance: Total amount available at the start of payout.
Annual return: Assumed average return during withdrawal phase; adjust for conservatism.
Years to pay out: Number of years you want the balance to last before reaching ~0.

How it works

Uses an annuity-style payment formula with monthly compounding: payout = balance × r / (1 − (1+r)^(-n)).

Total paid = payout × months; interest portion is total paid minus balance.

Formula

Monthly rate r = annualRate ÷ 12. Months n = years × 12. Monthly payout = balance × [r(1+r)^n] ÷ [(1+r)^n − 1]. Total paid = payout × n. Interest portion = total paid − balance.

When to use it

Estimating fixed monthly income from a retirement balance over a set period.
Comparing payout durations or return assumptions.
Testing whether a target income is sustainable given balance and assumed returns.
Comparing DIY drawdown vs fixed-term annuity quotes.

Tips & cautions

Use conservative return assumptions to reduce risk of depletion.
If you want lifelong payouts, consider annuity-like products or longer durations.
Longer payout periods reduce monthly income but lower the risk of running out too soon.
Consider taxes—this tool uses pre-tax amounts; net after-tax income will be lower.
Revisit your assumptions periodically; market returns and spending may change over time.
Assumes fixed return and fixed payout; ignores taxes and inflation.
Does not handle required minimum distributions or varying withdrawals.
No guarantee of lifetime income; balance is expected to be exhausted at the end of the term.

Worked examples

25-year payout at 4%

Balance $500,000; annual return 4%; years 25.
Monthly rate ≈ 0.04/12; n = 25×12 = 300.
Monthly payout solved via annuity formula; total paid and interest show how much of each payment is growth.

Shorter 15-year payout

Same $500,000 at 4% but years = 15.
Higher monthly payout but balance depletes faster; total interest is smaller due to shorter horizon.

Conservative return assumption

Balance $750,000; annual return 3%; years 25.
Using a lower return yields a lower payout than an aggressive 6% assumption, but reduces depletion risk.

Deep dive

Calculate a fixed monthly payout from your retirement balance over a chosen number of years with an assumed return.

Enter balance, years, and return to see payout amount, total paid, and interest portion.

Use this to sanity-check DIY drawdown strategies against annuity quotes or retirement income plans.

Test different durations and return assumptions to find a comfortable payout and risk profile.

FAQs

Does this model inflation?: No. Payouts are nominal. To model inflation, you could reduce the real payout target or adjust spending separately.
Is this like an annuity?: It uses a similar math framework for level payments, but it does not include insurance features or guarantees. Actual annuities also price in mortality and fees.
What if returns are volatile?: This assumes a steady average return. Real markets fluctuate; revisiting your plan and using more conservative assumptions can help manage risk.

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Simplified fixed-payout estimate. Assumes constant returns, fixed withdrawals, no taxes, and no inflation. Not an annuity or guarantee of lifetime income. Confirm assumptions and tax implications with a financial planner before making withdrawal decisions.