Annuity Calculator

Calculate the future value, present value, and payment schedule for ordinary annuities and annuities due. Includes growing annuity analysis and year-by-year breakdown.

For growing annuity calculation
Future Value
$411,033.67
Total value of the annuity at the end of the term
Present Value of Annuity
$151,525.31
Current worth of all future payments discounted at the given rate
Total Contributions
$240,000.00
Sum of all payments plus initial present value
Interest Earned
$171,033.67
Difference between future value and total contributions
Growing Annuity FV
$488,524.89
Future value if payments grow at 2% per year
Total Payments
240
Total number of periodic payments made

Interest vs Contributions

Contributions: 58.4%Interest: 41.6%
YearContributionsInterestCumulative InterestBalance
1$12,000.00$278.86$278.86$12,278.86
2$12,000.00$907.07$1,185.92$25,185.92
3$12,000.00$1,567.41$2,753.34$38,753.34
4$12,000.00$2,261.55$5,014.89$53,014.89
5$12,000.00$2,991.20$8,006.08$68,006.08
6$12,000.00$3,758.18$11,764.26$83,764.26
7$12,000.00$4,564.39$16,328.65$100,328.65
8$12,000.00$5,411.86$21,740.51$117,740.51
9$12,000.00$6,302.68$28,043.20$136,043.20
10$12,000.00$7,239.08$35,282.28$155,282.28
11$12,000.00$8,223.39$43,505.67$175,505.67
12$12,000.00$9,258.06$52,763.73$196,763.73
13$12,000.00$10,345.66$63,109.39$219,109.39
14$12,000.00$11,488.91$74,598.30$242,598.30
15$12,000.00$12,690.64$87,288.94$267,288.94
16$12,000.00$13,953.87$101,242.81$293,242.81
17$12,000.00$15,281.71$116,524.52$320,524.52
18$12,000.00$16,677.50$133,202.02$349,202.02
19$12,000.00$18,144.69$151,346.72$379,346.72
20$12,000.00$19,686.95$171,033.67$411,033.67
Planning notes, formulas, and examples

About the Annuity Calculator

An annuity is a series of equal payments made at regular intervals over a fixed period of time. Annuities are fundamental to personal finance, insurance, and retirement planning. Whether you are saving for retirement, receiving pension payments, or evaluating an insurance product, understanding how annuities work gives you a critical edge.

There are two main types: an ordinary annuity where payments occur at the end of each period, and an annuity due where payments happen at the beginning. The timing difference has a meaningful impact on the total value because payments in an annuity due earn one extra period of interest.

This calculator handles both ordinary and due annuities, computes the future value and present value, and also models a growing annuity where payments increase at a constant rate. The year-by-year schedule shows exactly how your money compounds, making it easy to set savings targets and compare different strategies. Use it to plan retirement contributions, evaluate pension offers, or understand structured settlement values.

When This Page Helps

Calculating annuity values by hand is tedious and error-prone, especially with monthly compounding and dozens of periods. This calculator handles the math so you can focus on the decision — how much to save, which annuity product to choose, and whether a lump sum or stream of payments is better for your situation.

It is widely useful for retirement planning, evaluating structured settlements, comparing insurance annuity quotes, and understanding sinking fund requirements for businesses.

How to Use the Inputs

  1. Select whether payments are at the end (ordinary) or beginning (annuity due) of each period.
  2. Enter the periodic payment amount — this is the regular contribution or payout per period.
  3. Enter the annual interest rate your annuity earns.
  4. Enter the total number of years for the annuity term.
  5. Optionally enter a present value if you are starting with an initial lump sum.
  6. Choose the compounding frequency — monthly is most common.
  7. Optionally enter a growth rate for growing annuity analysis.
  8. Review the future value, present value, total contributions, and interest breakdown.
Formula used
Ordinary Annuity FV = PMT × [(1 + r)^n − 1] / r Annuity Due FV = PMT × [(1 + r)^n − 1] / r × (1 + r) Present Value = PMT × [1 − (1 + r)^−n] / r Where PMT = periodic payment, r = periodic interest rate, n = total periods.

Example Calculation

Result: $411,033.72

With monthly payments of $1,000 at 5% annual interest compounded monthly over 20 years, the ordinary annuity grows to approximately $411,034. Total contributions are $240,000 and interest earned is about $171,034.

Tips & Best Practices

  • Start contributions early — even small amounts grow dramatically with decades of compounding.
  • Compare ordinary vs annuity due to see the benefit of paying at the beginning of each period.
  • Use the growing annuity option to model annual raises in your contribution amount.
  • Check the year-by-year table to see the "hockey stick" growth effect in later years.
  • Adjust the compounding frequency to match your actual account terms.

Understanding Annuity Types

Annuities come in many forms. Fixed annuities pay a guaranteed rate, while variable annuities are tied to investment performance. Immediate annuities start paying out right away, while deferred annuities accumulate value before payouts begin. The formulas in this calculator apply to all of these — the key difference is in the interest rate assumption.

Annuities in Retirement Planning

Most employer-sponsored retirement plans (401k, 403b) are essentially deferred annuities. You make regular contributions that compound over your working years, then convert to an income stream in retirement. Understanding the math behind annuities helps you set realistic savings targets and evaluate whether you are on track.

Lump Sum vs Annuity Payments

When receiving a pension or settlement, you often have the choice between a lump sum and periodic payments. Use the present value calculation to compare: if the lump sum is less than the present value of the annuity at a reasonable discount rate, the annuity payments are the better deal.

Sources & Methodology

Last updated:

Methodology

This worksheet combines three standard time-value-of-money layers: the future value of recurring payments, the future value of any starting lump sum, and the present value of the annuity payment stream. It lets the user switch between ordinary-annuity timing and annuity-due timing, change compounding frequency, and optionally compare a growing-payment stream through the separate growing-annuity calculation shown on the page.

It is a formula-based planning tool rather than a product illustration. The page does not model taxes, insurer fees, contract riders, mortality credits, or changing rates, so it should be used for clean annuity math and scenario comparison rather than for quoting a specific annuity contract.

Sources

  • Compound Interest Calculator (Investor.gov / U.S. Securities and Exchange Commission) — Official investor-education reference for the compounding mechanics used in the future-value and present-value calculations.
  • Annuities (Investor.gov / U.S. Securities and Exchange Commission) — SEC investor education overview describing immediate, deferred, and income-stream annuity structures.

Frequently Asked Questions

  • An ordinary annuity makes payments at the end of each period, while an annuity due makes payments at the beginning. Because payments in an annuity due earn interest for one extra period, the future value is slightly higher.

More in this topic

Alpha and Beta Calculator

Free alpha and beta calculator. Measure your portfolio's market sensitivity (beta) and excess risk-adjusted return (alpha) against a benchmark index.

Annualized Return Calculator

Free annualized return calculator. Convert cumulative investment returns into annualized rates to compare performance across different holding periods.