Annuity Calculator
Calculate the present value, future value, or periodic payment of an annuity.
Annuity Calculator
An annuity is a series of equal payments made at regular intervals. This calculator finds the future value, present value, or payment amount for any annuity — whether for retirement planning, loan analysis, or evaluating an insurance product.
What Is an Annuity?
In finance, an annuity is any series of equal periodic cash flows. This includes loan payments, mortgage payments, retirement income streams, and insurance annuity products. There are two types: ordinary annuity (payments at end of period) and annuity due (payments at beginning).
How to Use This Calculator
- Select what you want to calculate: Future Value, Present Value, or Payment Amount.
- Enter the payment amount per period (or leave blank if solving for payment).
- Enter the interest rate per period.
- Enter the number of periods.
- Select ordinary annuity or annuity due.
- Click Calculate.
Annuity Formulas
Future Value (ordinary): FV = PMT × [(1 + r)^n − 1] ÷ r
Present Value (ordinary): PV = PMT × [1 − (1 + r)^(−n)] ÷ r
Annuity due values = Ordinary annuity value × (1 + r)
Example Calculation
Save $500/month for 20 years at 7% annual rate (ordinary annuity):
- r = 7% ÷ 12 = 0.5833% per month | n = 240 months
- FV = $500 × [(1.005833)^240 − 1] ÷ 0.005833 = $261,019
Annuity vs. Lump Sum
When comparing an annuity offer (e.g., $3,000/month for 20 years) against a lump sum ($400,000), calculate the present value of the annuity stream. If PV of annuity > lump sum, take the annuity. Use a realistic discount rate (your expected investment return).
Common Mistakes to Avoid
- Confusing period rate with annual rate — Always divide the annual rate by the number of periods per year.
- Ignoring inflation on fixed annuities — A fixed $3,000/month loses purchasing power every year without a COLA feature.
- Not considering survivorship — Insurance annuity products often have joint-life options. Model both with our Annuity Payout Calculator.
Frequently Asked Questions
What is a deferred annuity?
An annuity that accumulates value over a period before payouts begin. Common in insurance products where you invest now and receive income starting at retirement.
What is an immediate annuity?
You pay a lump sum and receive payments immediately — usually monthly for life. Insurance companies price these based on your age, gender, and current interest rates.
Is an annuity a good investment?
It depends. For people who fear outliving their money, a lifetime income annuity provides peace of mind. But fees can be high and returns lower than self-managed investments. Compare carefully.
What happens to an annuity when I die?
Depends on the payout option chosen: single life (stops at death), joint-life (continues to spouse), period certain (continues to beneficiary for remaining guaranteed period).
Conclusion
Whether you're evaluating a pension option, planning savings withdrawals, or analyzing an insurance product, the annuity formula is the tool you need. Use this calculator to find future value, present value, or the payment that fits your retirement income plan.
Related: Annuity Payout Calculator | Present Value Calculator | Retirement Calculator | Pension Calculator
Ordinary vs Due
Ordinary annuities (end of period) are common for loans, while Annuities Due (start of period) are common for rent and leases.
