How the monthly payout is calculated
This is the present-value-of-annuity formula solved for the payment amount — the same formula used to compute a fixed loan payment, just applied in reverse: instead of a lender receiving payments, you're the one withdrawing them from a balance that keeps earning a return.
- PV — lump sum at retirement (₩)
- r — monthly return rate = annual rate ÷ 12
- n — number of payout months = payout years × 12
More detail
Designed to hit exactly zero at the end
Because the formula solves for the payment that fully amortizes the lump sum, the balance you haven't withdrawn yet keeps earning a return every month — so at any return above 0% you can take out more than a simple lump sum ÷ months split, and the balance still reaches exactly zero after the payout period.
Why it's the same formula as a loan payment
A loan payment and an annuity payout solve the identical math problem: given a present value, a periodic rate, and a number of periods, what's the constant periodic amount? A borrower pays that amount to a lender; a retiree withdraws that amount from their own balance. It's a standard present-value-of-annuity formula used throughout finance for both cases.
Practical tip. The result is only as reliable as the return rate you enter. Markets don't return the same percentage every year (sequence-of-returns risk), so a lower, more conservative rate produces a safer withdrawal plan than assuming your best-case average return every single year.
Frequently asked questions
If I withdraw ₩500,000,000 over 20 years at a 4% annual return, how much do I get each month?
About ₩3,029,902 a month — reaching a total of ₩727,176,395 over 240 months, roughly ₩227,176,395 more than the ₩500,000,000 you started with. Enter your own lump sum, return rate, and years above to see your numbers.
What if my expected return is 0%?
At 0% the formula reduces to a simple split: lump sum ÷ number of months. ₩500,000,000 over 20 years at 0% pays about ₩2,083,333 a month — roughly ₩946,568 less than the 4% case above, which shows how much continued investment growth adds to your monthly payout.
Does the lump sum run out at a specific point, or last forever?
It's designed to run out exactly at the end of your payout period — this is a fixed-term withdrawal (amortizing annuity), not a perpetual one. If you want the balance to last indefinitely, you'd withdraw only the return the balance earns each period, not any of the principal.
Why does this use the same formula as a loan payment calculator?
Solving for a constant periodic payment from a present value, a rate, and a number of periods is the same present-value-of-annuity math whether money is flowing out to a lender (loan) or out to you (retirement payout) — it's a standard formula in financial mathematics.