Annuity Calculator

Introduction

An annuity is a series of equal payments made at regular intervals over a set period of time. People often use annuities to save for retirement or to receive steady income after they stop working. Our Annuity Calculator helps you figure out how much money you will have in the future based on your regular payments, interest rate, and time period. You can also use it to find out how much you need to pay each period to reach a savings goal. Whether you are planning for retirement, comparing investment options, or just learning about how money grows over time, this tool makes the math simple and fast. Just enter your numbers and get clear results in seconds.

How to Use Our Annuity Calculator

Enter your investment details below to find out how much your annuity will be worth over time or how much you need to invest to reach your goal.

Starting Principal: Type in the amount of money you already have saved or plan to invest at the start. This is your initial lump sum payment. Enter this value in dollars.

Monthly Contribution: Enter the amount of money you plan to add to your annuity each month. Even small regular payments can grow significantly over time thanks to compound interest.

Annual Interest Rate (%): Enter the yearly interest rate you expect to earn on your annuity. This is usually given as a percentage. For example, if your rate is 5 percent, type in 5. If you need help understanding the difference between stated and effective rates, our APY Calculator can clarify how compounding frequency affects your true yield.

Number of Years: Enter how many years you plan to keep your money invested in the annuity. The longer your money stays invested, the more it can grow. You can use the Rule of 72 Calculator for a quick estimate of how long it takes your money to double at a given rate.

Compounding Frequency: Choose how often your interest is calculated and added to your balance. Common options include monthly, quarterly, semi-annually, or annually. More frequent compounding means your money grows slightly faster.

Annuity Type: Select whether your annuity is an ordinary annuity or an annuity due. With an ordinary annuity, payments are made at the end of each period. With an annuity due, payments are made at the beginning of each period.

Once you fill in all the fields, the calculator will show you the future value of your annuity, the total amount you contributed, and the total interest earned over your chosen time period.

What Is an Annuity?

An annuity is a financial product that pays out a stream of money over time. You can think of it as a contract—usually with an insurance company—where you put in a lump sum or make regular payments, and in return, you receive steady income later, often during retirement. Annuities are popular because they help people turn their savings into predictable, reliable income they won't outlive.

The Three Phases of an Annuity

This calculator covers the three key stages of annuity planning, each represented by its own tab:

Accumulation

The accumulation phase is when you build up your annuity's value. You start with an initial amount of money (your principal) and grow it over time by making regular contributions and earning compound interest. The longer your money stays invested, and the more often interest compounds, the faster your balance grows. This is the "saving" stage. A key choice during this phase is contribution timing—adding money at the beginning of each period (called an annuity due) means your contributions start earning interest right away, while adding at the end (called an ordinary annuity) means interest starts the next period. If you are also investing in stocks that pay dividends, our Dividend Calculator can help you project that additional income stream alongside your annuity savings.

Income Payout

The income payout phase is when your annuity starts paying you. You convert your accumulated balance into a series of regular payments—monthly, quarterly, semi-annually, or annually—over a set number of years. The calculator also lets you include a cost-of-living adjustment (COLA), which increases your payment each year by a percentage to help keep up with inflation. This is important because a dollar today buys more than a dollar ten or twenty years from now. To understand exactly how much purchasing power you lose over time, try our Inflation Calculator.

Depletion

The depletion analysis answers one of the most important questions in retirement planning: how long will my money last? You enter your starting balance, how much you plan to withdraw each period, the interest rate your remaining funds earn, and an annual increase to your withdrawals (to account for rising costs). The calculator then tells you exactly when your funds will run out. This helps you avoid the risk of spending down your savings too quickly. If you are exploring the idea of reaching financial independence early and then letting your savings grow without additional contributions, the Coast FIRE Calculator is a great complementary tool.

Key Concepts to Understand

Compound interest is interest earned on both your original money and the interest that has already been added. It is the main engine of growth in any annuity. How often compounding happens—monthly, quarterly, semi-annually, or annually—affects how much you earn. Monthly compounding produces a slightly higher return than annual compounding at the same stated rate, which is why the calculator shows an effective annual rate (EAR) that reflects the true yearly return. For a deeper look at how APR and APY differ, check our APR Calculator.

Inflation quietly reduces the purchasing power of fixed payments over time. That is why the COLA option in the payout mode and the annual withdrawal increase in the depletion mode are so useful. Even a modest 2% to 3% annual adjustment can make a meaningful difference over a 20- or 30-year retirement.

Tips for Using This Calculator

• Start with Accumulation to see how much you can save by retirement. Then switch to Income Payout or Depletion to plan how to spend it.
• Try different interest rates. Markets go up and down, so running several scenarios gives you a more realistic picture.
• Don't ignore inflation. Use the COLA or annual withdrawal increase fields to see how rising prices affect your plan.
• Compare contribution timing. Switching from end-of-period to beginning-of-period contributions can add thousands of dollars over a long time horizon at no extra cost.
• Check the year-by-year tables. They show exactly how your balance, contributions, interest, and payments change each year, making it easier to spot problems early.
• Factor in all your debts. Before committing heavily to an annuity, make sure high-interest debt is under control. Tools like the Debt Snowball Calculator or Debt Avalanche Calculator can help you build a payoff strategy.
• Know your full financial picture. Use our Net Worth Calculator to see where an annuity fits within your overall assets and liabilities, and consider running scenarios with the NPV Calculator or IRR Calculator to compare an annuity's return against other investment opportunities.

Frequently Asked Questions

What is the difference between an ordinary annuity and an annuity due?

An ordinary annuity makes payments at the end of each period. An annuity due makes payments at the beginning of each period. Because annuity due payments happen sooner, each payment earns interest for one extra period. This means an annuity due grows to a slightly larger amount over time, even if everything else stays the same.

What does compounding frequency mean and which option should I pick?

Compounding frequency is how often interest is calculated and added to your balance. The options are monthly, quarterly, semi-annually, or annually. Monthly compounding adds interest 12 times a year, so your money grows a little faster than with annual compounding at the same rate. Most annuities use monthly compounding, so that is a good default if you are not sure.

What is the effective annual rate (EAR) shown in the results?

The effective annual rate is the true yearly return you earn after accounting for compounding. For example, a 6% annual rate compounded monthly actually gives you about 6.17% per year. The EAR lets you compare different annuities or investments on equal terms, even if they compound at different frequencies.

How does the COLA field work in the Income Payout tab?

COLA stands for cost-of-living adjustment. When you enter a percentage here, your payment increases by that amount each year. For example, if your first-year payment is $3,000 per month and COLA is 2%, your second-year payment rises to about $3,060 per month. This helps your income keep up with inflation so your buying power does not shrink over time.

What does the Depletion tab tell me?

The Depletion tab shows how long your money will last if you take regular withdrawals. You enter your starting balance, withdrawal amount, interest rate, and an optional annual increase for withdrawals. The calculator then tells you the exact year and month your funds run out, plus how much you will withdraw in total and how much interest you will earn along the way.

Can I use this calculator for a fixed annuity and a variable annuity?

This calculator works best for fixed annuities where the interest rate stays the same. For a variable annuity, returns change based on market performance, so there is no single rate to enter. You can still use the tool to run different rate scenarios—try a low, medium, and high rate to get a range of possible outcomes.

What happens if my withdrawal amount is more than the interest earned each period?

If you withdraw more than the interest your balance earns, you start eating into your principal. Over time, your balance shrinks and eventually reaches zero. The Depletion tab shows exactly when this happens. To make your money last longer, you can lower your withdrawal amount, increase the interest rate, or reduce the annual withdrawal increase.

How do the annual addition and monthly addition work together in Accumulation mode?

The monthly addition is added every month. The annual addition is an extra lump sum added once per year, at the start of each new year. Both stack on top of each other. For example, if you enter $500 monthly and $5,000 annually, you contribute $6,000 from monthly payments plus $5,000 from the annual addition each year, totaling $11,000 per year in new contributions.

Does this calculator account for taxes?

No. This calculator shows results before taxes. In real life, annuity earnings are usually taxed as ordinary income when you withdraw them. Your actual take-home amount will be lower depending on your tax bracket. Talk to a tax professional or financial advisor for guidance on how taxes affect your specific annuity.

What interest rate should I use for my annuity calculation?

Use the rate offered by your annuity contract or the rate you expect to earn. Fixed annuities in the U.S. commonly offer between 3% and 6% depending on market conditions and the contract term. If you are just exploring, try several rates to see how different returns change your results. A small difference in rate can have a big impact over many years.

What does the auto-calculate toggle do?

When auto-calculate is on, the results update automatically every time you change a number. This lets you quickly test different scenarios without pressing the Calculate button each time. If your device runs slowly, you can turn it off and press Calculate manually when you are ready.

Can the annuity calculator tell me how much to save each month to reach a goal?

Yes, indirectly. In the Accumulation tab, adjust the monthly addition until the end balance matches your savings goal. With auto-calculate turned on, you can quickly try different amounts and see the result update in real time. This is a fast way to find the monthly contribution you need.

What does it mean if the Depletion tab says 200+ years never depleted?

It means your interest earnings are greater than or equal to your withdrawals, so your balance never runs out. This can happen when you have a large starting balance, a high interest rate, or small withdrawals. In this case, you could technically withdraw forever and still have money left.

How accurate are the charts and year-by-year tables?

The charts and tables are calculated month by month (or period by period) using the exact inputs you provide. They are mathematically accurate for a fixed interest rate. However, real-world results may differ because of taxes, fees, changing interest rates, and other factors the calculator does not include.