Lump Sum vs Annuity Calculator
Enter the lump sum offer and the annuity (monthly payment, years). We show present value of the annuity at a discount rate so you can compare.
Lump sum vs annuity
Enter values to calculate.
How it works
PV of annuity = Pmt × [1 − (1+r)^(−n)] / r. If PV > lump sum, annuity may be worth more (ignoring other factors).
When to use it
Use it to compare a pension lump sum offer to taking lifetime payments, or to value an annuity offer.
Frequently asked questions
What discount rate?
Use a rate that reflects risk (e.g. 3–5% for safe income). Higher rate = lower PV.
Taxes?
Lump sum and annuity may be taxed differently. Consider after-tax comparison.