Lump Sum vs Monthly Payments Calculator
Lottery winnings, pensions, and structured settlements all pose the same question: take the money now, or spread it over time? This calculator compares the two using present value.
How this calculator works
The calculator computes the present value of the payment stream — what those monthly payments are worth today if you could invest them at your expected return — and compares it to the lump sum. If the present value is higher than the lump sum, the payments are the better deal at that return rate; if lower, the lump sum wins. The higher your assumed return, the more attractive the lump sum becomes, because you could grow it faster than the fixed payments.
Frequently asked questions
What is present value?
Present value is what a future stream of money is worth today. A dollar received in 10 years is worth less than a dollar today because you could invest today's dollar in the meantime. The calculator discounts each payment by your assumed return rate.
Is the lump sum usually better?
Not always — it depends on the numbers and your assumed return. With a high return rate and long horizon, the lump sum often wins. With a conservative rate and guaranteed payments, the annuity can be worth more. The calculator shows the break-even point directly.
What else should I consider?
Taxes (annuity payments are taxed as received; a lump sum may push you into a higher bracket), fees, guaranteed income needs in retirement, and discipline. Many advisors recommend a mix: guaranteed payments for essentials, lump sum for growth.
Disclaimer: Results are estimates for general information only and do not constitute financial, tax, or legal advice. Figures reflect 2026 rules and may change. Always confirm current limits and consult a qualified professional before making decisions. Official figures: IRS.gov · 2026 limits per IRS tax inflation adjustments.