Immediate Annuity Calculator (SPIA)
Convert a lump sum into a guaranteed income stream. Enter your premium, rate, and period — see exactly what monthly payment you'll receive.
About this tool
A Single Premium Immediate Annuity (SPIA) is the simplest annuity: you give an insurer a lump sum, and they send you regular payments for a specified period. This calculator uses the standard present-value formula to compute what that payment will be.
How to use it
Quick steps to get the most out of this utility.
- 1
Enter your premium
The lump sum you are converting to income.
- 2
Set rate and period
Guaranteed interest rate and how many years you want payments.
- 3
Choose payment frequency
Monthly, quarterly, or annually.
- 4
See your payment
Guaranteed income amount and total payout over the period.
How Immediate Annuity Payments Are Calculated
The PMT formula is the backbone of annuity math: PMT = PV × r / (1 − (1 + r)^−n), where PV is your premium, r is the periodic interest rate (annual rate ÷ frequency), and n is total payment periods. For $250,000 at 4.5% for 20 years monthly: r = 0.375%, n = 240, PMT = $1,580/month. The total payout is $379,200 — $129,200 more than you put in, purely from the guaranteed interest.
Frequently asked questions
How is the SPIA payment different from a bond coupon?+
A bond pays interest only; at maturity you get your principal back. A SPIA payment includes both interest and return of principal — the insurer amortizes your premium over the payment period. This is why SPIA payments can exceed what a bond portfolio of the same size would yield annually.
What is the difference between a period-certain and a life annuity?+
A period-certain annuity (what this calculator models) pays for a fixed number of years regardless of when you die. A life annuity pays until death — if you live a long time, you receive more than you put in; if you die early, payments stop. Life annuities require actuarial inputs (age, gender) that this calculator doesn't model.
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