Annuity Calculator
Calculate the future value of an annuity or the payment required to reach a target retirement fund.
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Annuity Types
An ordinary annuity makes payments at the end of each period; an annuity due makes payments at the beginning. Annuity due values are always higher than ordinary annuity due to the extra compounding period.
What is the Annuity Calculator?
The Annuity Calculator evaluates financial products that pay out a fixed stream of income over time. It helps retirees figure out how much their current nest egg will pay them monthly, or how much they need to invest today to guarantee a specific future income.
How It Works (Formula)
Annuities use the Time Value of Money principle. The calculator balances the Present Value (your lump sum) against the required Future Payments. It assumes the remaining balance continues to earn interest while it is slowly drawn down to zero.
$$ PV = PMT \times \left[ \frac{1 - (1+r)^{-n}}{r} \right] $$
The Present Value of an Ordinary Annuity formula.
How to Use It
Enter the lump sum you plan to invest (the Present Value). Input the guaranteed interest rate offered by the insurance company, and the duration of the payout period. The calculator will output your guaranteed monthly or annual payout.