Annuity Calculator
Use this annuity calculator for three time-value-of-money questions: how much a lump sum can pay you each period for a set number of years, what regular contributions grow to, and how much you'd need today to fund a stream of payments. Choose the rate, payment frequency and timing, and optionally raise the payment every year.
Updated
Results
- Final-year paymentShown when a yearly increase is set
- Total payments
- Total interest
- Number of payments
- Rate per periodAnnual rate ÷ payments per year
| Year | Payments | Interest | End balance |
|---|
Results are estimates. See the methodology below.
How to use the annuity calculator
- Mode: Payout turns a lump sum into payments, Accumulation grows regular contributions (plus an optional starting balance), Present value finds the lump sum behind a payment.
- Amount: the lump sum, the contribution or the payment, depending on the mode.
- Annual rate and years: the return you assume and how long payments last.
- Frequency and timing: monthly, quarterly, semiannual or annual payments, made at the end of each period (an ordinary annuity) or at the beginning (an annuity due).
- Yearly increase (advanced): raises the payment by a fixed percentage once a year, like a cost-of-living adjustment.
The final-year payment is shown only when you enter a yearly increase.
How the calculator works
The rate per period is i = annual rate ÷ payments per year, and the number of payments is n = years × payments per year. For level payments made at the end of each period:
- Payout:
payment = PV × i ÷ (1 − (1 + i)^−n) - Present value:
PV = payment × (1 − (1 + i)^−n) ÷ i - Future value:
FV = contribution × ((1 + i)^n − 1) ÷ i, plus the starting balance × (1 + i)^n
For an annuity due, each payment is moved one period earlier. With a yearly increase, payments stay level within each year and step up by your percentage at the start of the next; the calculator discounts every payment individually. The yearly table shows payments, interest and the balance, which runs down to $0 in the payout and present value modes.
Examples
1. $300,000 paid out over 25 years
At 5% with monthly payments at the end of each month, the lump sum supports $1,753.77 a month. You receive $526,131.04 in total, of which $226,131.04 is interest. Small changes matter:
| Change | Monthly payment |
|---|---|
| Payments at the beginning of each month | $1,746.49 |
| 20 years instead of 25 | $1,979.87 |
| 4% instead of 5% | $1,583.51 |
| 0% (money simply divided) | $1,000.00 |
2. The same payout rising 3% a year
The first year pays $1,297.24 a month and the last year $2,637.03. You start lower in exchange for income that keeps growing; the total received is $567,558.30.
3. Saving $500 a month for 30 years
At 6%, contributions at the end of each month grow to $502,257.52: $180,000 contributed and $322,257.52 interest. Contributing at the beginning of each month gives $504,768.81.
4. What is $2,000 a month for 20 years worth today?
At 4%, the present value is $330,043.72. With payments rising 2% a year (ending at $2,913.62), it is $390,608.80.
Calculator vs. an insurance annuity
This is a time-value-of-money calculator, not an insurance quote. A commercial annuity is an insurance contract, fixed, indexed or variable, immediate or deferred, and its price reflects the insurer's fees, surrender charges, riders and, for lifetime income, how long people are expected to live. Payments here stop after the years you enter; lifetime payouts and taxes are not modeled. Guarantees depend on the insurer's financial strength and claims-paying ability, and annuities are not covered by FDIC insurance.
Frequently asked questions
What is the difference between an ordinary annuity and an annuity due?
In an ordinary annuity each payment comes at the end of the period; in an annuity due, at the beginning. When you're receiving payments, an annuity due pays slightly less per period because the first payment comes immediately; when you're saving, it ends with more because each deposit earns one extra period of interest.
What interest rate should I use?
Use the return you realistically expect on the money while it's paying out or growing. Testing a lower and a higher rate shows how sensitive the result is; no rate is guaranteed unless a contract guarantees it.
How can I check an insurer's period-certain quote?
Enter the premium in payout mode with the same term and frequency, then adjust the rate until the payment matches the quote. That rate is the return the contract implies before taxes. Quotes for lifetime income can't be compared this way because they depend on life expectancy.
What does the yearly increase do?
It raises the payment once a year by a fixed percentage, the way a cost-of-living adjustment works. It also accepts negative values, for payments that shrink each year.
Does the calculator include fees or taxes?
No. Contract fees, surrender charges and taxes on the earnings portion all reduce what you actually receive. Withdrawals before age 59½ can also be taxed and face a 10% penalty.
Sources
This calculator provides estimates for educational purposes and is not financial, insurance or tax advice. Commercial annuity payments depend on the contract, its fees and the insurer.