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Filed Under:Annuities, Suitability

How to Convert Lifetime Annuity Payouts Into Annual Interest Rate

AP Photo: Eric Risberg
AP Photo: Eric Risberg

Here’s a small Excel spreadsheet you can create to convert any single-premium annuity payout into an equivalent annual interest rate. (Boldface cells are for input.)









Mo. Payment



Period in Years



Monthly Rate



Annual Rate


 The formula to enter in output cell B4: = RATE((B3*12),B2,-B1))

The formula in output cell B5: = POWER(1+B4,12)-1

To estimate average life expectancy for males or females of any given age, using U.S. population mortality, click here.

 Example: A female age 67 is offered a lifetime annuity payout of $712.50 per month, for a $100,000 premium. She has a life expectancy of 18.16 years. If she collects payments until life expectancy, she will earn the equivalent of an annual interest rate of 4.1 percent on her money. (Note: The calculator assumes no “period certain” or residual value after life expectancy.)

Originally published on BenefitsPro. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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Nichole Morford
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