$1,500,000 Annuity Payout Over 20 Years
Estimated monthly payment for a 20-year fixed-length payout. Use the calculator below to try your own balance, rate, or payout length.
Monthly Payment
$9,089.70
Example
A $1,500,000 annuity paid out over 20 years at 4% annual interest produces a monthly payment of about $9,089.70 — $2,181,529 total, including $681,529 of interest.
Payout Length
20 years
Total Paid Out
$2,181,529
Total Interest Earned
$681,529
Where the total payout comes from
- Original Balance: $1,500,000
- Interest Earned: $681,529
What Is the Annuity Payout Phase?
Once an annuity's accumulation phase ends, it enters the payout (or "annuitization") phase, where the balance is converted into a stream of payments. Insurers offer several distribution options: a fixed length payout guarantees payments for a set number of years, a fixed payment pays a chosen amount until the balance runs out, and life-only or joint-and-survivor options pay for as long as the annuitant (or their spouse) lives.
This calculator models the two most common self-directed options — fixed length and fixed payment — where the remaining balance keeps earning interest throughout the payout period, offsetting some of the depletion from each withdrawal.
Remaining balance during payout
Year-by-Year Payout Schedule
| Year | Paid This Year | Interest Earned | Remaining Balance |
|---|---|---|---|
| 1 | $109,076 | $59,090 | $1,450,014 |
| 2 | $109,076 | $57,054 | $1,397,991 |
| 3 | $109,076 | $54,934 | $1,343,849 |
| 4 | $109,076 | $52,728 | $1,287,501 |
| 5 | $109,076 | $50,433 | $1,228,857 |
| 6 | $109,076 | $48,043 | $1,167,824 |
| 7 | $109,076 | $45,557 | $1,104,304 |
| 8 | $109,076 | $42,969 | $1,038,197 |
| 9 | $109,076 | $40,276 | $969,396 |
| 10 | $109,076 | $37,473 | $897,792 |
| 11 | $109,076 | $34,555 | $823,271 |
| 12 | $109,076 | $31,519 | $745,713 |
| 13 | $109,076 | $28,359 | $664,996 |
| 14 | $109,076 | $25,071 | $580,991 |
| 15 | $109,076 | $21,648 | $493,563 |
| 16 | $109,076 | $18,086 | $402,572 |
| 17 | $109,076 | $14,379 | $307,875 |
| 18 | $109,076 | $10,521 | $209,320 |
| 19 | $109,076 | $6,506 | $106,749 |
| 20 | $109,076 | $2,327 | $0 |
How Is the Payout Calculated?
For a fixed-length payout, the calculator solves for the level monthly payment that fully depletes the balance — with interest — over the chosen number of years, using the standard present-value-of-annuity formula. For a fixed payment, it instead simulates the balance month by month until it reaches zero.
Interest Keeps Working During Payout
Because the remaining balance keeps earning interest throughout the payout period, the total amount paid out over a fixed-length payout is always more than the original balance — the difference is the interest earned along the way, shown separately in the breakdown above.
Fixed Length vs. Fixed Payment
Fixed length is the right choice when you know how many years you want the income to last — for example, bridging the gap to Social Security or a pension. Fixed payment is better when you have a specific monthly budget target and want to know how long that income will hold up.
What Happens if the Payment Only Covers Interest?
If a fixed monthly payment is less than or equal to the interest the balance earns each month, the balance never depletes and payments could theoretically continue indefinitely — this calculator flags that case rather than showing a misleading depletion date.
Example — Your Current Inputs
A $1,500,000 annuity paid out over 20 years at 4% annual interest produces a monthly payment of about $9,089.70 — $2,181,529 total, including $681,529 of interest.
Additional Example — $500,000 Over 10 Years
A $500,000 annuity paid out over 10 years at 4% annual interest produces a monthly payment of about $5,062 — roughly $607,440 total, of which $107,440 is interest earned during the payout phase.
About These Parameters
- Starting Balance
- The annuity's value at the moment you begin taking distributions — typically the ending balance from the accumulation phase.
- Annual Interest Rate
- The rate the remaining balance continues to earn during payout. A higher rate means either a larger monthly payment for the same length, or a longer payout for the same payment.
- Payout Type
- Fixed Length solves for the payment given a chosen number of years; Fixed Payment solves for how many years a chosen payment amount will last.
Frequently Asked Questions
What happens to leftover money in a fixed-length payout?
If you pass away before the fixed length ends, most contracts pass the remaining balance to your named beneficiaries, unlike a life-only annuity where payments simply stop.
Does this model a lifetime annuity?
No — lifetime ("life-only") payouts depend on actuarial life-expectancy tables set by the insurer, not a simple interest calculation. This calculator only models fixed-length and fixed-payment distributions.
Are annuity payouts taxed?
Typically yes — the portion of each payment representing investment growth is taxed as ordinary income when withdrawn, while the portion representing your original after-tax contributions (if any) generally is not.