Understanding the annuity payout calculator
The payout phase of an annuity turns a lump sum into a stream of income. Mathematically it's the reverse of a loan: instead of borrowing money and repaying it, you hand over a principal and the insurer pays it back to you with interest over a set number of years. The remaining balance keeps earning, which is why the total paid out exceeds the principal.
This models a fixed-period payout, which exhausts the principal exactly at the end of the term. A life annuity instead pays for as long as you live, trading a potentially higher or lower total for protection against outliving your money. Fees, inflation, and the insurer's credited rate all affect real annuities, so compare quotes carefully before committing a large sum.
Results are estimates for education only and are not financial advice.