Turning savings into income
Building a nest egg is half the journey; the other half is converting it into a reliable income. This calculator finds the level monthly payment a lump sum can sustain over a fixed period while the remaining balance keeps earning a return — the same math behind fixed-period annuities and structured drawdowns. Notice the "of which is growth" line: because the unpaid balance keeps working, the total paid out exceeds the original lump sum.
The trade-off: certainty vs flexibility
A fixed-period payout gives a predictable income but ends when the term does — you must outlive it carefully or pair it with other income. A lifetime annuity (bought from an insurer) instead pays until you die, transferring longevity risk to the insurer, but you give up the lump sum and control. Self-managed drawdown (keeping the money invested and withdrawing flexibly) offers the most control and upside but no guarantee it lasts — the risk explored in our retirement withdrawal calculator.
What the return assumption does
- Higher assumed return → higher payout, but also more risk that reality falls short. Conservative retirees use lower rates (3–4%) for safety.
- Inflation isn't included in a level payout — $2,600/month feels smaller each year as prices rise. Consider whether you need rising income, which lowers the starting figure.
- Taxes apply to most retirement income; the figures here are pre-tax.
Using the number
This is a planning estimate, not a product quote. Real annuities carry fees and specific terms, and self-managed drawdown returns vary year to year. But seeing that, say, $500,000 at 4% supports roughly $2,600/month for 25 years turns an abstract nest-egg target into a concrete lifestyle question — and helps you judge whether your savings goal actually matches the retirement you want.