Annuity calculator
The annuity calculator works out how large a monthly payout your saved capital can provide when you draw it down gradually while the remainder keeps earning interest. Enter the capital amount, annual interest rate and drawdown period — the result is a regular annuity that runs the capital down to exactly zero at the end. Ideal for planning withdrawals from pension savings, investments or an inheritance.
How the annuity is calculated
An annuity from capital is the mirror image of a loan: instead of repaying a borrowed sum, you draw down your saved capital in regular monthly payouts. The balance you have not yet withdrawn continues to earn interest, so the annuity can be higher than a simple division of capital by the number of months. The same annuity formula as for a loan applies.
Three inputs drive the result: the saved capital P, the monthly interest rate i (annual rate divided by twelve) and the number of drawdown months n (years times twelve). The annuity is set so the capital is depleted to zero precisely at the end of the period.
monthly annuity = P × i ÷ (1 − (1 + i)−n)
total paid out = monthly annuity × n
- Convert the annual rate to monthly: i = rate ÷ 100 ÷ 12.
- Convert the drawdown period to months: n = years × 12.
- Plug into the annuity formula to get the monthly annuity.
- Multiply the annuity by the number of months for the total paid out.
If the interest rate is zero, the formula simplifies to plain division of capital by the number of months (P ÷ n).
Worked example step by step
Take saved capital of 2,000,000 CZK, an annual interest rate of 3 % and a drawdown period of 20 years. The monthly rate is 0.03 ÷ 12 = 0.0025 and the number of months is 20 × 12 = 240.
| Step | Item | Calculation | Amount |
|---|---|---|---|
| 1 | Monthly rate (i) | 3 % ÷ 12 | 0.25 % |
| 2 | Number of months (n) | 20 × 12 | 240 |
| 3 | Discount factor | 1 − (1.0025)−240 | 0.450777 |
| 4 | Numerator | 2,000,000 × 0.0025 | 5,000 CZK |
| 5 | Monthly annuity | 5,000 ÷ 0.450777 | 11,092 CZK |
| 6 | Total paid out | 11,091.95 × 240 | 2,662,068 CZK |
Two million crowns at 3 % interest therefore yields an annuity of roughly 11,092 CZK per month for 20 years. Over the whole period you withdraw about 2,662,068 CZK — some 662 thousand more than the capital itself, because the undrawn balance keeps earning interest. (The total is computed from the unrounded monthly annuity, which is why it does not come out to exactly 11,092 × 240.)
What affects the result
- Capital amount — the annuity grows in direct proportion to the saved sum; double the capital means double the annuity.
- Interest rate — a higher rate raises the annuity, because the unspent balance earns more.
- Drawdown period — the longer the period, the lower the monthly annuity but the higher the total paid out.
- Zero interest — with no growth the capital is simply split across the number of months.
When an annuity is useful and what to watch out for
The calculator is for rough planning of how to draw down savings — for example as a top-up to a pension or a payout from an investment portfolio. It assumes a constant interest rate throughout and regular monthly payouts, with the capital depleted to zero at the end.
The calculation ignores inflation (the real value of the annuity falls over time), tax on returns, fluctuations in actual investment performance and any fees. With market investments the return is not guaranteed, so the real annuity may differ. Treat the result as a model estimate, not binding financial advice — always discuss a specific product with an adviser.
⚠️ Indicative calculation, rates current for 2026. Not a substitute for an accountant or tax advisor — verify important decisions with the Czech Financial Administration.
FAQ
What annuity does 2 million crowns provide at 3 % over 20 years?
About 11,092 CZK per month. Over the full 20 years (240 months) you withdraw roughly 2,662,068 CZK, because the undrawn balance keeps earning interest. At the end the capital is depleted to zero.
Will any capital be left after the drawdown ends?
No. This calculator computes an annuity where the capital is depleted to exactly zero at the end of the chosen period. If you want to preserve the capital and draw only the returns, the calculation is different (annuity = capital × interest rate).
How does it differ from drawing only the interest?
Drawing only the interest on 2 million at 3 % would give you about 5,000 CZK a month with the capital left intact. The annuity is higher (here 11,092 CZK) because you gradually consume the capital itself.
Does the calculator account for inflation?
No. The annuity is in nominal crowns, so its real purchasing power declines over the years. To protect the annuity against inflation, use a lower real rate or keep a reserve.
Do I have to pay tax on the annuity?
Taxation depends on the source of the capital and the type of product (pension savings, mutual funds, savings account). The calculator does not deduct tax. Verify the specific tax treatment with a financial adviser or the tax authority.
What happens if I enter a zero interest rate?
With zero interest the capital is simply spread evenly across the number of months. From 2 million over 20 years that would be exactly 8,333 CZK per month (2,000,000 ÷ 240).
How reliable is the assumption of a constant rate?
For a savings account or bond the rate can change, and for equity investments it fluctuates significantly. The model uses a single fixed rate throughout, so the real annuity may differ in either direction.
Can I draw the annuity for longer than the period I calculate?
Only if you lower the monthly payout or if the capital earns more than you withdraw. With the calculator's settings the capital runs out after the chosen period, so a longer drawdown needs more capital or a smaller annuity.
Sources & legislation
📅 Last updated: 11 July 2026