Annuity Calculator
Calculate present value, future value, payment amounts, term length, or interest rates for any annuity
Calculate Annuity Values
Years
Months
For growing annuities where payments increase each period
📊 Quick Scenarios
Future Value Results
Value Composition
Principal
$0.00
Contributions
$120,000.00
Interest
$35,282.28
Annuity Type: Ordinary Annuity (End of Period)
Payment Frequency: Monthly | Compounding: Monthly
Total Periods: 120 | Final Balance: $155,282.28
Accumulation Schedule
| Year | Starting | Payments | Interest | Ending | Real Value |
|---|---|---|---|---|---|
| 1 | $0.00 | $12,000.00 | $278.86 | $12,278.86 | $11,979.37 |
| 2 | $12,278.86 | $12,000.00 | $907.07 | $25,185.92 | $23,972.32 |
| 3 | $25,185.92 | $12,000.00 | $1,567.41 | $38,753.34 | $35,986.32 |
| 4 | $38,753.34 | $12,000.00 | $2,261.55 | $53,014.89 | $48,028.87 |
| 5 | $53,014.89 | $12,000.00 | $2,991.20 | $68,006.08 | $60,107.47 |
| 6 | $68,006.08 | $12,000.00 | $3,758.18 | $83,764.26 | $72,229.66 |
| 7 | $83,764.26 | $12,000.00 | $4,564.39 | $100,328.65 | $84,403.01 |
| 8 | $100,328.65 | $12,000.00 | $5,411.86 | $117,740.51 | $96,635.12 |
| 9 | $117,740.51 | $12,000.00 | $6,302.68 | $136,043.20 | $108,933.65 |
| 10 | $136,043.20 | $12,000.00 | $7,239.08 | $155,282.28 | $121,306.27 |
Annuity Types
Ordinary Annuity
Payments at end of period
Most common type
Annuity Due
Payments at beginning of period
Higher present/future value
Growing Annuity
Payments increase over time
Inflation protection
Fixed vs Variable
Fixed Annuities
Guaranteed return rate, predictable income, low risk
Average: 3-4% annually
Variable Annuities
Return varies with market, higher potential, more risk
Higher fees: 2-3% annually
Indexed Annuities
Tied to market index, minimum guarantee, capped gains
Hybrid of fixed & variable
Smart Annuity Tips
Start early to maximize compound interest
Consider tax implications for retirement accounts
Higher payment frequency can improve returns
Use growing annuities for inflation protection
Compare fees - they significantly impact returns
Understand surrender periods before committing
Immediate vs. Deferred Annuities
| Feature | Immediate Annuity | Deferred Annuity |
|---|---|---|
| Payout Start | Within 1 month to 1 year | After accumulation phase |
| Accumulation Phase | No accumulation | Tax-deferred growth period |
| Initial Premium | Lump sum payment | Lump sum or periodic payments |
| Best For | Retirees needing immediate income | Pre-retirees building wealth |
| Withdrawal Age | Any age (immediate) | 59½+ to avoid penalties |
| Tax Treatment | Part principal, part earnings | Earnings taxed on withdrawal |
Understanding Annuities
What is an Annuity?
An annuity is a financial product that involves a series of payments made at equal intervals. Annuities can be used for both accumulating wealth (through regular deposits) and generating income (through regular withdrawals). They are typically offered by insurance companies as retirement planning tools.
Payment Types
- •Ordinary Annuity: Payments made at the end of each period
- •Annuity Due: Payments made at the beginning of each period
- •Fixed Annuity: Payments remain constant throughout the term
- •Growing Annuity: Payments increase at a fixed rate each period
Key Formulas
Future Value of Ordinary Annuity:
FV = PMT × [((1 + r)^n - 1) / r]
Present Value of Ordinary Annuity:
PV = PMT × [(1 - (1 + r)^-n) / r]
Growing Annuity Future Value:
FV = PMT × [((1 + r)^n - (1 + g)^n) / (r - g)]
Where:
- • PMT = Payment amount
- • r = Interest rate per period
- • n = Number of periods
- • g = Growth rate per period
Annuity Pros & Cons
Advantages
- ✓
Tax-Deferred Growth: Similar to 401(k)s, earnings grow without immediate taxation
- ✓
No Contribution Limits: Unlike IRAs, you can invest unlimited amounts
- ✓
Guaranteed Income: Fixed annuities provide predictable, steady income streams
- ✓
Protection Against Overspending: Helps manage assets and prevent depletion
- ✓
Inflation Protection: Growing annuities help maintain purchasing power
Disadvantages
- ✗
Limited Liquidity: Surrender charges and penalties reduce flexibility
- ✗
High Fees: Commissions can be 1-10%, plus annual management fees
- ✗
Complex Tax Rules: Various withdrawal rules and tax implications
- ✗
Lower Returns: Average 3-4% returns, below stock market historical averages
- ✗
Early Withdrawal Penalties: 10% IRS penalty if withdrawn before age 59½
Understanding Annuity Fees
Surrender Charges
Fees for early cancellation, typically 5-9 years
1-10%
Decreases over time
Commissions
Broker fees, varies by annuity type
1-10%
Variable: 4-7%, Immediate: 1-3%
Administrative Charges
Annual service and mailing costs
0.10-0.30%
Per year of policy value
Management Fees
Portfolio management for variable annuities
0.50-2.00%
Similar to mutual fund fees
Mortality & Expense Fee
Insurance company charges for benefits
0.40-1.75%
Per year, varies by age
Rider Charges
Optional add-ons for extra features
0.25-1.50%
Income, death benefit riders
💡 Pro Tip: Always ask for a complete fee disclosure before purchasing an annuity. Total fees can significantly impact your returns over time. Consider low-fee index annuities or tax-deferred retirement accounts as alternatives.
Common Annuity Applications
Retirement Planning
Calculate how much you need to save regularly to reach your retirement goals
Education Savings
Plan regular contributions to education savings accounts like 529 plans
Loan Payments
Calculate monthly payments for mortgages, car loans, and other installment loans
Investment Analysis
Evaluate periodic investment strategies and compare different scenarios
Insurance Payouts
Calculate structured settlement payments and life insurance benefits
Business Planning
Plan equipment leases and regular business investments