Growing Annuity Calculator
Calculate future and present values of annuities with increasing payments over time
Calculate Growing Annuity
Annuity Configuration
The initial lump sum deposit
The amount of the first periodic payment
Duration of the annuity in years
Annual rate of return or interest rate
Annual percentage increase in payments
How often interest is compounded
Growing Annuity Results
First Payment: $1,000.00
Final Payment: $1,304.77
Periodic Growth Rate: 3.0000%
Periodic Interest Rate: 5.0000%
Payment Schedule (First 12 Payments)
| Period | Payment Amount | Growth |
|---|---|---|
| 1 | $1,000.00 | +$0.00 |
| 2 | $1,030.00 | +$30.00 |
| 3 | $1,060.90 | +$60.90 |
| 4 | $1,092.73 | +$92.73 |
| 5 | $1,125.51 | +$125.51 |
| 6 | $1,159.27 | +$159.27 |
| 7 | $1,194.05 | +$194.05 |
| 8 | $1,229.87 | +$229.87 |
| 9 | $1,266.77 | +$266.77 |
| 10 | $1,304.77 | +$304.77 |
Example Calculation
Retirement Savings Example
Scenario: Annual retirement contributions that grow with inflation
First Payment: $5,000
Annual Growth Rate: 3% (inflation adjustment)
Investment Return: 7% annually
Time Period: 30 years
Formula Applied
FV = P × [(1 + r)ⁿ - (1 + g)ⁿ] / (r - g)
Where: P = $5,000, r = 7%, g = 3%, n = 30
Result: Significant growth due to both compound interest and increasing contributions
Types of Growing Annuities
Ordinary Annuity
Payments made at end of each period
Most common type
Annuity Due
Payments made at beginning of each period
Higher present value
Key Benefits
Accounts for inflation and income growth
More realistic retirement planning
Maintains purchasing power over time
Higher future values than fixed annuities
Understanding Growing Annuities
What is a Growing Annuity?
A growing annuity is a series of payments that increase at a constant rate each period. Unlike regular annuities with fixed payments, growing annuities account for inflation and rising incomes, making them more realistic for long-term financial planning.
Common Applications
- •Retirement savings with salary increases
- •Education funding with tuition inflation
- •Investment plans with increasing contributions
- •Pension payments adjusted for inflation
Growing Annuity Formulas
Future Value:
FV = P × [(1 + r)ⁿ - (1 + g)ⁿ] / (r - g)
Present Value:
PV = P × [1 - ((1 + g)/(1 + r))ⁿ] / (r - g)
- P: First payment amount
- r: Interest rate per period
- g: Growth rate per period
- n: Number of periods
Special Case: When r = g, use FV = P × n × (1 + r)ⁿ⁻¹