Estimate periodic payouts from a fixed annuity. Enter your principal, interest rate, deferral period, and payout duration to see guaranteed income amounts and a year-by-year breakdown of interest earned and payouts received.
A fixed annuity is an insurance contract that promises a guaranteed minimum interest rate on your money during an accumulation phase, then converts to a guaranteed income stream during the payout phase. Unlike variable annuities (which track market returns) or indexed annuities (which track market performance with caps), fixed annuities promise specific dollar outcomes — your money earns at least the contracted rate, and you receive at least the contracted payout. The trade-off is lower upside potential in exchange for principal protection and predictability.
Fixed annuities are sold by insurance companies and are backed by the insurer's general account (not market investments). The guarantees are only as good as the insurer's solvency, though state-level guaranty associations provide a backstop up to state-specific limits (typically $250,000–$500,000 per insurance company per state). Fixed annuities are most commonly used by conservative retirees wanting income certainty, by people who want to guarantee a piece of their retirement income beyond Social Security and pensions, and by sophisticated investors using them for tax-deferred accumulation.
This calculator estimates the future value of your principal at the end of the deferral period and the periodic payouts during the distribution phase. The calculations assume the contracted rate holds throughout, which is the case for "multi-year guaranteed annuities" (MYGAs) but not for fixed annuities with variable crediting rates. Like all insurance-product analyses, treat the calculator output as the contractual promise — the actual realized return depends on the specific product, its surrender charge schedule, optional riders, and the insurer's creditworthiness over the contract's life.
$150,000 principal, 5.5% MYGA rate, 5-year deferral, 15-year payout starting at age 65. Monthly payouts. End of deferral (age 65): $150,000 × 1.055^5 ≈ $195,700 Monthly payout: $195,700 × payout factor at 5.5%/12 over 180 months ≈ $1,599/month Annual payout: ~$19,200 Total 15-year payouts: ~$288,000 The 5.5% MYGA rate (locked for 5 years) provides certainty during the pre-retirement period when a market downturn could be devastating. After year 5, conversion to income annuity provides 15 years of predictable income. Alternative: CD ladder over the same 5 years at similar rates, then build income from the matured ladder.
$1,000,000 principal, 4.8% rate, 10-year deferral, no income payout (let it grow and pass to beneficiary). Value at end of year 10: $1,000,000 × 1.048^10 ≈ $1,596,500 Used as a tax-deferred wrapper for high-net-worth investors who have maxed out retirement accounts and want additional tax-deferred growth. Interest accumulates without annual tax (unlike a taxable brokerage account holding bonds). Trade-off vs. taxable brokerage: tax deferral now but ordinary income tax on withdrawal (vs. potentially long-term capital gains). For high-bracket investors in their 50s expecting lower brackets in retirement, this can be efficient.
$300,000 principal, 4.5% rate, no deferral (immediate payout), 25-year payout, monthly payments. Monthly payout: $300,000 × payout factor at 4.5%/12 over 300 months ≈ $1,668/month Annual: ~$20,000 This guarantees $20,000/year of income for 25 years from a $300K investment. At 4.5% rate, this is a structured payout — similar to what a CD ladder would produce but with the contractual annuity guarantee. Most retirees would supplement this with Social Security and a market-invested portfolio. The fixed annuity provides the "guaranteed floor" while the rest of the portfolio provides growth potential.
Use this calculator when evaluating a fixed annuity offer from an insurance company, comparing a fixed annuity to alternatives (CDs, bonds, structured payouts), or planning a structured retirement income strategy.
Fixed annuities make sense for: conservative retirees prioritizing income certainty over growth potential, high-net-worth investors using them as tax-deferred wrappers, and anyone wanting to insure a portion of retirement income against longevity (using lifetime fixed annuities, not the term version this calculator models).
Fixed annuities are less appropriate for: emergency funds (surrender charges make early withdrawal expensive), long-term wealth accumulation (equity returns typically dominate fixed annuity returns over 20+ year horizons), and inflation-sensitive plans (most fixed annuity payouts don't adjust for inflation).
Pair this with the annuity calculator (for lifetime annuity scenarios), the CD calculator (for the CD alternative), the retirement-income and retirement-savings calculators (for the broader retirement picture), the bond-yield calculator (for the bond fund alternative), and the lump-sum-vs-annuity calculator if you're weighing fixed annuity against a pension lump sum.
A few critical considerations specific to fixed annuities:
1. **Surrender charges.** Most fixed annuities have surrender charge schedules — typically 5–10% in year 1, declining by 1% per year until year 7–10 when surrender charges disappear. Don't put money in a fixed annuity that you might need before the surrender period ends.
2. **Insurer creditworthiness.** Fixed annuity guarantees are backed by the issuing insurance company's general account. Check the insurer's financial strength rating (A.M. Best, S&P) before committing. State guaranty associations provide a backup, but coverage limits vary and the process of recovery is slow.
3. **Tax treatment.** Annuity withdrawals are taxed as ordinary income (not capital gains). For pre-59½ withdrawals, an additional 10% penalty applies (similar to early IRA withdrawals). The "exclusion ratio" for non-qualified annuity payouts treats part of each payment as return of principal (tax-free) and part as interest (taxable).
4. **Compare to alternatives.** A 4.5% fixed annuity is essentially a 4.5% structured payout. Compare to: 4.5% CDs (similar rate, no income feature, FDIC insured), bond funds (higher expected return with market risk), or just managing systematic withdrawals from a balanced portfolio (most flexibility, no guarantees).
5. **Read the contract.** Fixed annuity contracts are dense and often include provisions that affect actual realized returns (rate reset features, withdrawal limits, death benefit provisions, optional riders that change the payout structure). Read carefully or have an independent fiduciary advisor review.
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Years before payouts begin
Periodic Payout
$1,577
Total Payouts
$378,430
Total Interest Earned
$178,430
Balance at Payout Start
$249,236
| Year | Start Balance | Interest | Annual Payout | End Balance |
|---|---|---|---|---|
| 6 | $249,236.39 | $11,054.70 | $18,921.51 | $241,369.58 |
| 7 | $241,369.58 | $10,693.30 | $18,921.51 | $233,141.37 |
| 8 | $233,141.37 | $10,315.30 | $18,921.51 | $224,535.16 |
| 9 | $224,535.16 | $9,919.93 | $18,921.51 | $215,533.58 |
| 10 | $215,533.58 | $9,506.40 | $18,921.51 | $206,118.47 |
| 11 | $206,118.47 | $9,073.87 | $18,921.51 | $196,270.83 |
| 12 | $196,270.83 | $8,621.47 | $18,921.51 | $185,970.79 |
| 13 | $185,970.79 | $8,148.29 | $18,921.51 | $175,197.57 |
| 14 | $175,197.57 | $7,653.37 | $18,921.51 | $163,929.43 |
| 15 | $163,929.43 | $7,135.71 | $18,921.51 | $152,143.64 |
| 16 | $152,143.64 | $6,594.28 | $18,921.51 | $139,816.40 |
| 17 | $139,816.40 | $6,027.97 | $18,921.51 | $126,922.86 |