Lump Sum For Annuity Income
Calculator
Results
- Required lump sum
- 568,357.448924
- Total paid out
- 900,000
- Interest earned over the payout
- 331,642.551075
Retirement planning results
| Required lump sum | 568,357.448924 |
| Total paid out | 900,000 |
| Interest earned over the payout | 331,642.551075 |
formula-map diagram
- Required lump sum
- 568,357.448924
- Total paid out
- 900,000
- Interest earned over the payout
- 331,642.551075
Retirement planning relationship
Formula
L = PMT × (1 - (1 + i)^-n) ÷ i= 568357.44892448
Note
This is not financial advice. It is a simplified model: it applies the displayed standard formula to the figures you entered, assumes a single constant rate for every year, and ignores taxes, fees, sequence-of-returns risk, health costs, longevity risk and any country's specific pension, benefit or minimum-distribution rules. Real returns can be negative and real retirements rarely follow a smooth curve. Check the assumptions and consult a licensed adviser before acting on any figure.
More in Retirement planning
See all →Frequently asked questions
What does this calculator find?+
It's the reverse of an annuity income calculation: given a target periodic income, an interest rate, and a payout duration, it works out the lump sum of capital needed today to fund that income stream. It answers 'how much do I need to deposit to get this monthly amount?'
Why does the required lump sum shrink with a higher assumed interest rate?+
A higher interest rate means the capital itself earns more between payments, so less principal is needed upfront to sustain the same income level — the growth does more of the funding work.
Does a longer payout period always require more capital?+
Generally yes for a fixed periodic amount, since more total payments must be funded, but the relationship isn't strictly linear because compounding also has more time to help fund later payments — the net effect still increases the lump sum needed for longer terms.
Should I use a nominal or real (inflation-adjusted) interest rate?+
If your target income needs to keep its purchasing power over time, use a real rate (net of expected inflation) or build in periodic increases; using a nominal rate without adjusting the income will understate how much capital you truly need for a flat real income.
Is this the same as a bank CD or GIC calculation?+
It's similar in structure (both use time-value-of-money math), but a CD/GIC typically returns interest without depleting principal, while an annuity-style calculation here assumes the balance is drawn down to zero (or near it) by the end of the term, which supports a larger payment for the same lump sum.