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. This tool works out the math for planning retirement, comparing investment options, or learning how money grows over time. Just enter your numbers to see your results.
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.
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.
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.
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.
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.