Annuity Calculator
Calculate annuity payments, future values, and retirement income streams
The Annuity Calculator helps you determine the value of annuity payments, whether you're planning for retirement income, evaluating an annuity purchase, or calculating the present value of future payments. Choose from immediate or deferred annuities and see how different factors affect your income stream.
Calculation Type
Annuity Type
Basic Information
Advanced Options
Annuity Results
Enter your annuity details to see calculations
Common Scenarios
Retirement Income
$500,000 investment, 20-year payments
Deferred Annuity
$250,000 investment, 10-year deferral
Fixed Income
$3,000 monthly, calculate lump sum needed
How Annuities Work
Annuity Basics
An annuity is a financial product that provides regular payments in exchange for a lump sum investment.
- Immediate Annuity: Payments begin immediately after purchase
- Deferred Annuity: Payments begin at a future date, allowing growth during deferral
- Fixed Annuity: Guaranteed payment amounts and interest rates
- Variable Annuity: Payments vary based on investment performance
Calculation Methods
Annuity calculations use present value and future value formulas:
Where:
- PV = Present Value (lump sum)
- PMT = Payment amount
- r = Interest rate per period
- n = Number of payments
Example Calculation
Scenario
Investment: $400,000 lump sum
Interest Rate: 5% annually
Payment Period: 20 years
Payment Frequency: Monthly
Type: Immediate annuity
Results
Monthly Payment: $2,639
Total Payments: $633,360
Total Interest: $233,360
Number of Payments: 240
Annual Income: $31,668
Frequently Asked Questions
What's the difference between immediate and deferred annuities?
Immediate annuities begin payments within a year of purchase, while deferred annuities delay payments to a future date. Deferred annuities allow your investment to grow tax-deferred during the accumulation phase.
Are annuity payments guaranteed?
Fixed annuity payments are guaranteed by the insurance company issuing the annuity, backed by their financial strength and state guarantee associations. Variable annuities have payments that fluctuate with investment performance.
How are annuity payments taxed?
For non-qualified annuities, only the earnings portion of each payment is taxable. For qualified annuities (funded with pre-tax dollars), the entire payment is typically taxable as ordinary income.
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