Immediate Annuity Calculator - Retirement Income

An immediate annuity turns a lump sum into a scheduled income stream that starts right away. Retirees use that structure to cover essential bills, but quoted payouts mix interest, principal return, fees, and optional inflation features. The immediate annuity calculator isolates a level payment from present value, annual rate, years, and payment frequency so you can see income, total payments, and an optional after-tax annual amount before talking to an insurer. The payment is the ordinary-annuity formula PV × r / (1 − (1+r)^(−n)), where r is the periodic rate and n is the number of payments. Annual frequency is the default; monthly and quarterly divide the annual rate and multiply the number of periods. Total payments equal the periodic payment times n. After-tax annual income applies a flat tax rate to annualized payments. An inflation rate field is collected for scenario notes but does not escalate the level payment in this version, so treat the result as a nominal, non-COLA annuity. A $100,000 premium at 5% for 10 years paid annually produces about $12,950.46 per year and $129,504.57 of total payments. The same premium paid monthly yields a smaller annualized total because interest is compounded on a different schedule. Compare that guaranteed-looking income with what the same $100,000 might earn in a bond ladder, remembering that insurance quotes also embed mortality credits, expenses, and the insurer’s investment yield. Immediate annuities are generally illiquid. Medical underwriting, joint-life options, cash-refund features, and state guaranty-association limits are not modeled. Inflation can erode a level payment, and taxes depend on whether the premium was qualified money. Confirm a live quote, surrender terms, and tax treatment with a licensed agent and a tax professional before exchanging principal for income. Shop quotes with the same premium, start date, and whether income is single-life, joint-life, or period certain. The immediate annuity calculator is closest to a period-certain, level-payment illustration at a rate you choose. If an insurer offers more income than this worksheet at the same rate, the difference is often mortality credits or a different compounding convention—not free return. If it offers less, expenses and profit loading are the usual explanation. Keep the rate conservative when the money must last.