Annuity vs Lump Sum: Which Retirement Payout Is Better?

When you retire or receive a pension offer, choosing between a guaranteed monthly annuity payment and a one-time lump sum is one of the biggest financial decisions of your life. Our annuity calculator helps you compare both options by computing the present value of the annuity stream against the lump sum, factoring in investment returns, taxes, and inflation.

A lump sum gives you full control over investments and estate planning, but requires discipline to avoid overspending and risk management expertise. An annuity provides predictable income that you cannot outlive, but typically loses purchasing power to inflation unless it includes a cost-of-living adjustment. The calculator models both scenarios over a 30-year retirement.

Consider your health, other income sources, risk tolerance, and spouse's financial security when making this decision. Use our investment calculator to see what the lump sum could grow to if invested, and our retirement calculator to determine if the annuity alone covers your essential expenses.