Annuity Calculator
Annuity Calculator — Future Value Estimator
Estimate the end balance of a fixed or growing annuity given regular contributions and a fixed return rate
| Year | Deposit | Interest Earned | Ending Balance |
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Instant Calculation
Results update live as you move sliders — no button needed for real-time exploration.
Beginning or End Timing
Model an annuity due (deposits at the start of each period) or an ordinary annuity (deposits at the end).
Year-wise Schedule
Expand the accumulation table to see exactly how your balance grows year by year.
Understanding Annuities
What is an Annuity and How Does It Work?
A complete guide to annuities, their types, fees, and how they fit into retirement planning
In the U.S., an annuity is a contract, usually issued by an insurance company, that pays out a stream of cash flows to an investor over a period of time — most often as a way of saving for retirement. In many cases, payments continue for the duration of the investor's life. The person who owns the contract is the annuity owner, who is often also the annuitant — the person whose life expectancy and age determine the terms of the contract. The owner controls the policy, holds rights to its cash surrender value, can assign it, and can make withdrawals from it.
Insurers pay out either as an immediate annuity (payments begin right away) or a deferred annuity (payments begin after an accumulation phase). Earnings inside an annuity grow and compound on a tax-deferred basis, meaning taxes are postponed until a later date. Most people use annuities as a supplement to other retirement vehicles such as IRAs, 401(k)s, or pensions, particularly once those accounts approach their contribution limits. Annuities are not the right fit for everyone — each individual should weigh their own situation or speak with a financial professional.
This calculator estimates the future value of an annuity using the standard compound growth formula, applied separately to the starting principal and to each periodic contribution:
For example, with a starting principal of $20,000, annual additions of $10,000, a 6% annual growth rate, and a 10-year term — with contributions made at the beginning of each period (annuity due) — the end balance is approximately $175,533.38. Of that, $20,000.00 is the original principal, $100,000.00 comes from total additions, and $55,533.38 represents return/interest earned. Switching the timing to "end of period" (an ordinary or immediate annuity) slightly lowers the end balance, since each contribution then has one less period to compound.
Pay out a guaranteed amount, with the rate largely dependent on market interest rates when the contract is signed. Existing fixed-rate contracts aren't affected by later rate changes, though most lack cost-of-living adjustments, so purchasing power can erode over time. Fixed annuities promise return of principal and are popular with retirees and conservative investors.
Pay a fluctuating amount based on the performance of underlying investments, usually mutual funds, across asset classes such as large-cap stocks, foreign stocks, bonds, and money market instruments. Principal is not guaranteed, and these tend to carry some of the highest fees in the financial industry — investors must be comfortable managing the underlying investments.
Also called equity-indexed annuities, these blend fixed and variable features, though they're legally classified as fixed. They guarantee a minimum return like a fixed annuity, while a portion tracks an index such as the S&P 500. Gains are usually capped, trading some upside for the added guarantee.
A related subset of fixed annuities, multi-year guarantee annuities (MYGAs), pay a specific yield for a set period — much like a Certificate of Deposit (CD), but with tax-deferral benefits, longer time horizons, and typically a lump-sum purchase. Their returns generally track 10- or 20-year treasury bonds, making them worth considering alongside a CD calculator comparison.
An upfront premium is paid in, and payouts begin quickly — anywhere from the next month to within a year — so there's little or no accumulation phase. These are popular with people who are already retired or retiring soon and want a steady, predictable income for life.
Built up over time through deposits (or a lump sum) until a chosen date, at which point an income stream begins. Earnings grow tax-free until annuitization, after which they become taxable. Withdrawals before age 59½ generally trigger a 10% IRS penalty, so these suit people saving well ahead of retirement.
- Deferred annuities offer tax-deferred growth, similar to a 401(k) or traditional IRA.
- No contribution limit, unlike IRAs and 401(k)s.
- Certain annuities provide guaranteed, predictable income with minimal risk — attractive to conservative investors worried about outliving their assets.
- Can serve as a regulated income stream, helping manage spending so assets last for life.
- Surrender charges and IRS early-withdrawal penalties reduce liquidity, especially in the early years.
- Tax and withdrawal rules are complex and vary by contract.
- Fees can be high — commissions up to 10%, plus administrative, mortality & expense, and rider charges.
- Returns tend to be modest; fixed indexed annuities have averaged around 3.27% annually, below typical long-run stock market returns.
Qualified retirement accounts like 401(k)s and traditional IRAs can be rolled into an annuity tax-free, becoming a "qualified annuity" funded with pre-tax money. This can help convert savings into a more predictable income stream in retirement. A few things to keep in mind: transfers must still be reported on that year's tax return even though they aren't taxable, only one IRA rollover is allowed per twelve-month period, and any amount not rolled over within 60 days is treated as taxable ordinary income.
Cancelling an annuity contract is known as "surrendering" it. Most insurers charge a surrender fee if the contract is cancelled within its surrender period — often starting around 8% in year one and stepping down by roughly a percentage point each year. Surrender schedules typically run from the contract's original start date, and some plans apply a separate schedule to each new deposit. A 10% IRS penalty may also apply on top of any surrender charge. Most contracts include a "free-look" period — usually 10 to 30 days after signing — during which the policy can be cancelled without surrender charges.