Annuity Calculator — Monthly Pension from Your Corpus

Corpus Amount

₹

₹1,00,000₹10,00,00,000

Annual Interest Rate

% p.a.

115

Annuity Duration

years

140

Payout Frequency

Monthly Payout

₹0

Total Payouts

₹0

Interest Earned

₹0

Annuity Breakdown

Corpus vs total interest earned

Corpus Invested

₹50.00 L

Interest Earned

₹0

Total Received

₹50.00 L

What is a Annuity?

An annuity calculator converts a retirement corpus into a regular income stream — showing you exactly how much monthly, quarterly, or annual pension your savings will generate over your chosen period. For anyone who has accumulated a lump sum through NPS, EPF, PPF, FDs, mutual fund SWPs, or insurance maturity proceeds, the annuity calculator answers the most important retirement planning question: how long will my money last, and how much can I safely withdraw?

The calculator uses the standard Present Value of Annuity formula — the same mathematics used by insurance companies, pension funds, and financial planners globally. You enter your corpus, the rate of return you expect from the annuity investment, and the period for which you want income; the calculator gives you the maximum periodic payout that will draw the corpus to exactly zero by the final payment.

India's retirement landscape makes the annuity calculator especially relevant. NPS subscribers must compulsorily convert 40% of their corpus into a lifetime annuity at retirement. Employees who receive large EPF or gratuity payouts at superannuation need to decide how to convert that lump sum into regular income. The annuity calculator lets you model both scenarios — and use reverse mode to answer "how big a corpus do I need for ₹50,000 per month?"

The annuity calculator complements the Retirement Calculator, which plans how much you need to accumulate, and the NPS Calculator, which estimates your NPS corpus — together, they cover the full retirement planning journey from saving to spending.

How to use this Annuity calculator

Enter your Corpus Amount — the total lump sum you are investing in the annuity. This could be your NPS corpus portion, EPF maturity amount, insurance proceeds, or any retirement savings. Enter ₹50,00,000 for a ₹50 lakh corpus.
Set the Annual Interest Rate — the rate you expect the annuity to earn. For insurance company annuities, use the rate quoted in your policy (typically 5.5–7%). For self-managed drawdown from FDs or debt funds, use the expected post-tax return. For senior citizen savings schemes, the current rate is 8.2% p.a.
Choose the Annuity Duration — how many years you want the income to last. For retirement planning, use your life expectancy minus your retirement age (e.g. plan for 25–30 years if retiring at 60, assuming life expectancy of 85–90).
Select the Payout Frequency — monthly for regular household expenses, quarterly if you prefer managing larger amounts, or annually for institutional or large-corpus scenarios.
Read your Periodic Payout — this is your pension income per period. If it falls short of your expense target, either increase the corpus (using reverse mode), increase the assumed rate (by choosing higher-yield instruments), or reduce the duration.
Use Reverse Mode to back-calculate your required corpus — enter your target monthly payout to see exactly how large a corpus you need to fund it.

Formula & Methodology

The annuity calculator uses the Present Value of Annuity (PMT) formula:

Periodic Payout = C × r ÷ (1 − (1 + r)^(−n))

Where:
- C = Corpus Amount (₹)
- r = Periodic interest rate = Annual Rate ÷ Payout Frequency ÷ 100
- n = Total number of payout periods = Duration (years) × Payout Frequency

Derived outputs:
- Total Payouts = Periodic Payout × n
- Total Interest Earned = Total Payouts − Corpus Amount

Reverse mode formula (solving for required corpus):

C = Payout × (1 − (1 + r)^(−n)) ÷ r

Variable definitions:
- C — Corpus / lump sum invested (₹)
- r — Periodic rate per payout period (decimal)
- n — Total number of payouts over full duration
- Payout — Fixed income per period (₹)

Worked example:

A 60-year-old retiree has a corpus of ₹75,00,000 (₹75 lakh) from EPF, NPS, and PPF combined. She wants monthly income for 25 years and estimates a 6.5% p.a. return from a safe annuity investment.

- Periodic monthly rate = 6.5 ÷ 12 ÷ 100 = 0.5417%
- Number of monthly periods = 25 × 12 = 300
- Monthly Payout = ₹75,00,000 × 0.005417 ÷ (1 − (1.005417)^(−300))
- Monthly Payout = ₹40,625 ÷ 0.7994 ≈ ₹50,818 per month
- Total Payouts = ₹50,818 × 300 = ₹1,52,45,400
- Total Interest Earned = ₹1,52,45,400 − ₹75,00,000 = ₹77,45,400

The corpus of ₹75 lakh generates over ₹77 lakh in interest income over 25 years, meaning the retiree receives more in interest than she invested from her own savings.

Assumptions: This calculator models a fixed-period annuity (corpus exhausted at end of term), not a life annuity (which pays until death regardless of term). The interest rate is assumed constant throughout the period. Annuity income is taxable in India — the calculator shows pre-tax payouts. For insurance company annuities, the actual quoted rate from the insurer may differ from the rate you model here. Use the Lumpsum Calculator to see how your corpus would grow if invested instead of being annuitised.

Frequently Asked Questions

What is an annuity calculator?

An annuity calculator computes the regular income (payout) you receive when you invest a lump sum corpus at a fixed interest rate over a defined period. It uses the Present Value of Annuity formula to convert a one-time retirement corpus into a stream of equal periodic payments — monthly, quarterly, half-yearly, or annually. It is the essential tool for anyone planning how to draw income from retirement savings like NPS, EPF corpus, or insurance maturity proceeds.

How is annuity payout calculated?

The annuity payout uses the PMT (Payment) formula: Payout = Corpus × r ÷ (1 − (1 + r)^(−n)), where r is the periodic interest rate (annual rate divided by payout frequency) and n is the total number of payout periods (years × frequency). For example, a ₹50 lakh corpus at 6.5% p.a. paid monthly for 20 years yields a monthly payout of approximately ₹37,291. The formula ensures the corpus is fully exhausted by the last payment.

What is the difference between an annuity and an SIP?

An SIP (Systematic Investment Plan) accumulates wealth — you make regular payments into an investment and receive a growing corpus at the end. An annuity does the opposite — you invest a corpus upfront and receive regular income from it over a period. SIPs are used during the wealth-building (accumulation) phase of life; annuities are used during the income (distribution) phase, typically in retirement. Use our [SIP Calculator](/sip-calculator/) to build a corpus and the Annuity Calculator to plan how to draw from it.

What is the difference between an annuity and SWP?

An annuity and a Systematic Withdrawal Plan (SWP) both generate regular income from a corpus, but they work differently. An annuity guarantees a fixed payout calculated to exhaust the corpus exactly over the defined period — it factors in interest earned on the remaining balance. An SWP simply withdraws a fixed amount each period regardless of returns, which can either exhaust the corpus too early or leave a surplus depending on actual market performance. An annuity's payout is mathematically guaranteed; an SWP's longevity depends on actual returns. See our [SWP Calculator](/swp-calculator/) for a direct comparison.

What is the difference between immediate annuity and deferred annuity?

An immediate annuity starts paying out right after you invest the corpus — typically within one month of purchase. A deferred annuity has an accumulation phase during which your premium grows, followed by a payout phase that begins at a future date (like retirement age). This calculator models the immediate annuity structure, which is the most commonly used product for retirement income planning in India and the structure used in NPS annuity purchases.

What annuity rate can I expect from insurance companies in India?

Annuity rates offered by Indian life insurance companies typically range from 5.5% to 7% per annum depending on the insurer, your age at purchase, and the specific annuity variant (life annuity, annuity with return of purchase price, joint life annuity, etc.). LIC and major private insurers like HDFC Life, SBI Life, and ICICI Prudential Life publish their annuity rates periodically. Rates are locked at the time of purchase — buying when rates are higher locks in a better income for life.

How much corpus do I need for a ₹50,000 monthly pension?

To generate ₹50,000 per month for 20 years at 6.5% p.a., you need approximately ₹67 lakh corpus. For 25 years at the same rate, you need about ₹75 lakh. For a lifetime income (assuming 30 years), you need approximately ₹79 lakh. Use the reverse mode of the Annuity Calculator — enter your desired monthly payout and the calculator computes the required corpus. Pair with our [Retirement Calculator](/retirement-calculator/) to plan how much you need to save to accumulate that corpus.

Is annuity income taxable in India?

Yes, annuity income is fully taxable in India as income from other sources under the Income Tax Act. The entire periodic payout is added to your total income for the year and taxed at your applicable slab rate. For NPS subscribers, the annuity purchased with the mandatory 40% of the corpus is taxed in the year of receipt. There is no exemption for annuity income — unlike interest from PPF or equity long-term capital gains up to ₹1 lakh.

What happens to the corpus if I die before the annuity period ends?

This depends on the annuity type. In a 'life annuity with return of purchase price' variant, the original corpus is returned to the nominee. In a pure 'life annuity' variant, payouts stop on death and no corpus is returned. In a 'certain and life annuity,' payouts continue to the nominee for the guaranteed period (typically 5, 10, or 15 years) if the annuitant dies during that period. The annuity variant you choose at purchase is irrevocable — choose carefully based on your estate planning needs.

How is NPS annuity different from a regular annuity?

When an NPS subscriber retires, they must compulsorily use at least 40% of their total NPS corpus to purchase a lifetime annuity from an empanelled Annuity Service Provider (ASP). The remaining 60% can be withdrawn as a lump sum (tax-free). The NPS annuity is a life annuity — it pays for life regardless of how long you live. This calculator models a fixed-period annuity with a defined corpus exhaustion date, which is useful for planning NPS along with other retirement savings. Use our [NPS Calculator](/nps-calculator/) to estimate your NPS corpus first.

Can I use the annuity calculator for PPF maturity planning?

Yes. Enter your projected PPF maturity amount as the Corpus Amount, set the interest rate to the return you expect from a safe post-retirement investment (typically 6–7% for FDs or senior citizen savings schemes), and set the duration to your expected retirement years. The calculator will show your monthly income from that corpus. Use the [PPF Calculator](/ppf-calculator/) to estimate the maturity amount, then plug it into this annuity calculator to see the pension it can generate.

What payout frequency should I choose for my annuity?

Monthly payouts are best for meeting regular household expenses — rent, groceries, utilities, and EMIs. Quarterly payouts suit those with quarterly expense cycles or who prefer to manage income in larger tranches. Annually is rarely practical for retirement income but suits institutional investors or those with other regular income sources. Note that higher payout frequency means slightly lower per-period amounts because of the more frequent compounding implicit in the PMT formula, though the difference is small at typical interest rates.