Annuity Calculator

Put away $500 a month at a steady 5% for 20 years and you end up with about $205,517. You only contributed $120,000 of your own money - the other $85,517 is growth. That gap between what you pay in and what you walk away with is the whole point of an annuity calculator: it shows how a stream of regular payments compounds into a much larger future lump sum, so you can plan how much to set aside and for how long.

How the future value is calculated

An annuity is simply a series of equal payments made at regular intervals. The accumulated (future) value of an ordinary annuity uses this formula:

where PMT is the payment each period, i is the periodic interest rate (annual rate ÷ periods per year), and n is the total number of periods (years × periods per year). If you start with an existing balance, that lump sum grows separately as PV × (1 + i)n, and the two results are added. For an annuity due (payments at the start of each period), the series result is multiplied by (1 + i) because every payment earns one extra period of interest.

How to use this calculator

You only need four numbers to get a realistic projection. Work through the fields in order:

1. Contribution per period: enter the dollar amount you plan to pay in each time, for example $500.
2. Frequency: choose monthly, quarterly, or annually. This sets how often you contribute and how often interest is credited.
3. Annual rate: use the credited rate on a fixed annuity, or a realistic expected return for a variable or indexed product (4-7% is a common planning range).
4. Years: enter how long you will keep contributing during the accumulation phase.
5. Starting balance (optional): if you are rolling in an existing amount, add it - it compounds as a lump sum on top of your contributions.
6. Annuity due (optional): tick the box if you pay at the start of each period rather than the end.

Press Calculate and read the accumulated value at the top, then scroll the year-by-year table to watch contributions and growth diverge over time.

Who this calculator is for

This tool is built for anyone trying to turn regular savings into a future number. That includes:

• Retirement savers deciding how much to put into a deferred annuity each month.
• People comparing a fixed annuity to a CD or bond ladder for the same contributions.
• Anyone rolling a lump sum into an annuity and continuing to add to it.
• Budgeters who want to know what a $250 or $1,000 habit becomes in 10, 20, or 30 years.
• Students and finance learners checking textbook future-value-of-annuity problems.

Key annuity terms explained

• Accumulation phase: the period when you pay in and the balance grows. This calculator covers this phase.
• Payout (annuitization) phase: when the balance is converted into income payments. Not modeled here.
• Ordinary annuity: payments at the end of each period - the default assumption.
• Annuity due: payments at the start of each period, which grow slightly more.
• Fixed annuity: credits a guaranteed rate set by the issuing insurer.
• Variable/indexed annuity: returns tied to investment performance or a market index, with caps, floors or fees.
• Surrender charge: a fee for withdrawing more than allowed during an early "surrender period," often the first 5-10 years.
• Tax-deferred: earnings are not taxed until withdrawn, which lets the balance compound faster.

Worked example 1: building a quarter-million in retirement savings

Suppose you contribute $1,000 every quarter at 6% for 25 years as a long-horizon retirement supplement. You pay in $100,000 across 100 quarterly payments, but the accumulated value reaches about $228,803 - roughly $128,803 of tax-deferred growth. The longer time horizon and the higher rate do most of the heavy lifting: by the final years, the interest credited each quarter is larger than the payment itself.

Worked example 2: annuity due vs. ordinary annuity

Take the same $500/month at 5% for 20 years. As an ordinary annuity (paying at month-end) it accumulates to about $205,517. Switch to an annuity due (paying at month-start) and it grows to about $206,373 - roughly $856 more. The difference looks small here, but it widens with higher rates and larger payments, which is why the start-vs-end timing matters for products like leases and insurance premiums that are always paid in advance.

Worked example 3: rolling in a starting balance

Imagine you move an existing $50,000 into a fixed annuity crediting 5% and keep adding $300/month for 15 years. The $50,000 lump sum compounds on its own while the $300 stream builds alongside it. Together they reach about $185,872, against total contributions of $104,000 - about $81,872 of growth. Combining a lump sum with ongoing contributions is one of the most common real-world annuity setups.

What changes the result the most

If you adjust the inputs and watch the accumulated value move, a few factors dominate:

• The rate: on $500/month for 20 years, the final value swings from about $164,151 at 3% to $205,517 at 5% to $260,463 at 7%. Small rate differences compound into large gaps.
• Time: the longer you contribute, the more growth dominates over contributions, because compounding accelerates in the later years.
• Payment size: the future value scales directly with the payment - double the contribution, double the result (at the same rate and term).
• Frequency: paying more often invests money sooner, which adds modestly to the total.
• Timing (due vs. ordinary): start-of-period payments earn one extra period of interest each.

Tips for using an annuity well

• Fill tax-advantaged accounts first: annuities make most sense after you have maxed out a 401(k) and IRA, since those usually have lower fees.
• Read the surrender schedule: know how long your money is locked up and what early withdrawal costs.
• Compare the credited rate to alternatives: a fixed annuity competes with CDs and bonds; the tax deferral is the differentiator.
• Watch the fees on variable products: mortality, expense and rider fees can quietly cut a percentage point or more off your return.
• Use the rate conservatively: a lower assumed rate gives you a safety margin in your plan.

Fixed, variable, and indexed annuities compared

"Annuity" is an umbrella term, and the three common deferred types behave very differently during the accumulation phase this calculator models:

• Fixed annuity: the insurer credits a guaranteed rate for a set period, much like a bank CD but tax-deferred. This is the type the calculator matches most cleanly, because the rate really is constant. Enter the contract's credited rate and the projection will be close to what you actually receive.
• Fixed indexed annuity (FIA): returns are linked to a market index such as the S&P 500 but capped on the upside and floored at 0% on the downside, so you never lose principal to market drops. Because of caps, participation rates and spreads, the effective credited rate is usually well below the raw index return - enter a conservative blended rate rather than the index's headline performance.
• Variable annuity: your money goes into investment sub-accounts whose value rises and falls with the market, and the contract layers on mortality & expense, administrative and rider fees that often total 2-3% a year. A single constant rate can only approximate this; subtract the all-in fee load from your expected gross return before entering it.

If you mainly want market-style growth without insurance wrappers, a plain brokerage projection from the Investment Calculator or the Compound Interest Calculator is often a cleaner comparison point.

From accumulated value to retirement income

The number this tool produces is a lump sum at the end of the accumulation phase - it does not tell you the monthly check an insurer would pay once you annuitize. Converting a balance into lifetime income depends on your age, gender, the payout option (single life, joint life, period certain) and prevailing interest rates when you turn the contract on, all of which are priced by the insurer's actuarial tables. As a very rough planning anchor, a healthy 65-year-old buying an immediate annuity today might receive something on the order of 6-7% of the premium per year as income, but quotes vary widely by carrier and option. To stress-test how long a balance lasts if you draw it down yourself instead of annuitizing, pair this page with the Retirement Withdrawal Calculator, and remember that inflation will erode the purchasing power of a level income stream over a multi-decade retirement.

Limitations and assumptions

This calculator is a planning estimate, not a contract illustration. Keep these assumptions in mind:

• It assumes a constant rate for the entire term; variable and indexed annuities fluctuate.
• It shows pre-tax, pre-fee growth and does not subtract product charges or surrender penalties.
• It does not adjust for inflation, so the future amount buys less than the same dollars today.
• It models only the accumulation phase, not the income/payout phase.
• Your actual contract terms - guaranteed rate, caps, riders and fees - are set by the insurer and may differ.

How it compares to related calculators

This page answers "what will my regular annuity contributions be worth?" If your question is a little different, a sister tool fits better:

• To project a general investment account with a lump sum plus contributions, use the Investment Calculator.
• To see how a single sum compounds without contributions, use the Compound Interest Calculator.
• To plan an employer-sponsored plan with a match, use the 401(k) Calculator.
• To estimate tax-free growth, use the Roth IRA Calculator.
• To check whether you are on track overall, use the Retirement Calculator.
• To compare a fixed annuity against a bank CD at the same rate, use the CD Calculator.
• To work backward from a target lump sum to today's value, use the Present Value Calculator.

Sources

• U.S. Securities and Exchange Commission (Investor.gov) - Annuities: fixed, variable, and indexed basics.
• Internal Revenue Service (IRS) - Topic No. 410, Pensions and Annuities (taxation of withdrawals).
• Consumer Financial Protection Bureau (CFPB) - What is an annuity?