Turn a pot of savings into an income. Choose whether you want to know the monthly payout for a set number of years, or how long the money lasts if you withdraw a fixed amount each month.
While you draw an income, the remaining balance keeps earning a return. That is why a lump sum can pay out much more in total than its starting value.
Payout = B × r ÷ (1 − (1 + r)−n)
B — starting balance
r — yearly return ÷ 12 ÷ 100
n — number of monthly payments
The calculator assumes a steady return and level payments. Real investments go up and down, and inflation reduces what each payment buys, so it is prudent to plan with a cautious return.
Common questions
Is this the same as buying an annuity from an insurer?
It shows the same maths. A purchased annuity can also pay for life, however long you live, which a savings pot cannot guarantee; insurers price that in.
What return should I assume?
For a mixed portfolio, many planners use 3–5% a year. Use a lower figure if the money is in cash or if you want a safety margin.