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Annuity Calculator

Finance

Solve for

Per payment period (i): 0.5833% · EAR 7.2290%

End: the first payment is one period from the start. Beginning: the first payment is at the start.

Term

= 240 monthly payments

For loans, use the Loan EMI Calculator. To compare offers or value a lump sum today, use the Present Value Calculator.

Final balance

300,850.72

Saving 500.00 a month for 20 years on top of 10,000.00 grows to 300,850.72 at 7% compounded monthly.

Starting amount

10,000.00

Total contributions

120,000.00

240 payments

Total put in

130,000.00

Interest earned

170,850.72

56.79% of the final balance

Rate per payment period (i)

0.5833%

EAR 7.2290%

  • From year 9, you earn more interest each year than you contribute.
Spreadsheet check

=FV(7%/12, 240, -500, -10000) → 300,850.72

Spreadsheets use signs for direction: money you pay in is negative.

Balance over time

Year by year

Interest out-earns your contributions from year 9.

Where the final balance comes from

Starting amount: 10,000.00 (3.32%)

Contributions: 120,000.00 (39.89%)

Interest: 170,850.72 (56.79%)

If the return were different

5%

232,643.24

6%

264,122.49

7% (yours)

300,850.72

8%

343,778.24

9%

394,034.95

Schedule

YearTime (years from today)Opening balanceContributionInterestClosing balance
Year 1 (#1–12)1.0010,000.006,000.00919.1916,919.19
Year 2 (#13–24)2.0016,919.196,000.001,419.3824,338.58
Year 3 (#25–36)3.0024,338.586,000.001,955.7332,294.31
Year 4 (#37–48)4.0032,294.316,000.002,530.8540,825.16
Year 5 (#49–60)5.0040,825.166,000.003,147.5549,972.70
Year 6 (#61–72)6.0049,972.706,000.003,808.8259,781.53
Year 7 (#73–84)7.0059,781.536,000.004,517.9070,299.43
Year 8 (#85–96)8.0070,299.436,000.005,278.2481,577.68
Year 9 (#97–108)9.0081,577.686,000.006,093.5593,671.22
Year 10 (#109–120)10.0093,671.226,000.006,967.79106,639.02
Year 11 (#121–132)11.00106,639.026,000.007,905.24120,544.25
Year 12 (#133–144)12.00120,544.256,000.008,910.45135,454.70
Year 13 (#145–156)13.00135,454.706,000.009,988.32151,443.02
Year 14 (#157–168)14.00151,443.026,000.0011,144.12168,587.14
Year 15 (#169–180)15.00168,587.146,000.0012,383.47186,970.62
Year 16 (#181–192)16.00186,970.626,000.0013,712.41206,683.03
Year 17 (#193–204)17.00206,683.036,000.0015,137.43227,820.45
Year 18 (#205–216)18.00227,820.456,000.0016,665.45250,485.91
Year 19 (#217–228)19.00250,485.916,000.0018,303.94274,789.85
Year 20 (#229–240)20.00274,789.856,000.0020,060.87300,850.72

About This Tool

Annuity Calculator – Grow a Balance or Draw a Steady Income

An annuity is simply a series of regular, equal (or steadily rising) payments. You either pay money in to build a balance, as with a savings plan, or draw money out of a balance as income, as with a pension pot or an insurer's payout annuity. This annuity calculator links the five quantities involved, starting amount, regular payment, ending balance, time and rate of return, and solves for whichever one you leave blank. It works at any payment frequency, handles yearly increases, deferred income and perpetuities, and shows a full payment schedule.

Future value of an annuity, worked through

With a per-period rate i and N payments, the future value of a starting amount S plus contributions PMT is FV = S(1+i)^N + PMT × ((1+i)^N − 1) / i. Saving 500 a month for 20 years on top of 10,000 at 7% compounded monthly gives i = 0.07/12 = 0.5833% and (1+i)^240 = 4.038739. The starting amount grows to 40,387.39 and the contributions to 260,463.33, for a final balance of 300,850.72. You put in 130,000, so 170,850.72 (56.8%) is interest. From year 9 onward the balance earns more interest each year than you contribute.

The payout formula, worked through

Drawing income runs the same maths in reverse. To use up a balance B over N payments, PMT = B / a_N, where a_N = (1 − (1+i)^−N) / i is the annuity factor. For 300,000 over 25 years at 5% compounded monthly, a_N = 171.0600, so the income is 1,753.77 a month. Total income is 526,131.04: your own 300,000 comes back, plus 226,131.04 of interest.

Ordinary annuity vs annuity due

In an ordinary annuity payments happen at the end of each period; in an annuity due they happen at the start. Contributions made earlier earn one more period of growth, so the future value is multiplied by (1 + i). Income drawn earlier leaves less behind to earn, so the same 300,000 pays 1,746.49 instead of 1,753.77.

Payout rate is not your return

Insurers often quote a payout rate: first-year income divided by the premium. Because part of every payment is your own money coming back, the payout rate overstates the return. 100,000 that buys 600 a month for 20 years has a 7.20% payout rate but an implied return of only 3.886%. Use Implied return to check any quote.

Perpetuities, growing income and deferral

A perpetuity pays forever, so it can only pay the interest: PMT = B × i. At 4% a year, 500,000 supports 1,636.87 a month. If the income must rise by g each year, the balance must grow just as fast, which gives the Gordon formula B = PMT / (r − g): 500,000 at 4% with 2% yearly rises pays 10,000 in year one. Deferring the start lets the balance compound first: 100,000 left for 10 years at 5% becomes 164,700.95, which pays 1,086.95 a month for 20 years instead of 659.96 if it started today.

Compounding frequency vs payment frequency

The rate you enter is compounded on its own schedule, which need not match the payments. The calculator converts it to a per-payment rate with i = (1 + R/m_c)^(m_c/m_p) − 1, the standard financial-calculator handling when P/Y ≠ C/Y. 7% compounded annually becomes 0.5654% a month, not 0.5833%.

Spreadsheet sign conventions
Excel and Google Sheets functions such as FV, PMT, PV, NPER and RATE use signs for direction: money you pay in is negative and money you receive is positive. The calculator shows the matching formula with your numbers so you can reproduce each level-payment result.

What this tool does not model

It does not model lifetime (mortality-based) annuities, variable or indexed returns, fees and surrender charges, or taxes. Results are in nominal money; for income that keeps pace with inflation, set the yearly increase to the inflation rate. For loans, use a loan EMI calculator instead.

Frequently Asked Questions

Is the Annuity Calculator free?

Yes, Annuity Calculator is totally free :)

Can I use the Annuity Calculator offline?

Yes, you can install the webapp as PWA.

Is it safe to use Annuity Calculator?

Yes, any data related to Annuity Calculator only stored in your browser (if storage required). You can simply clear browser cache to clear all the stored data. We do not store any data on server.

How does this annuity calculator work?

Pick a mode — grow a balance with regular contributions, or draw a regular income from a lump sum — then choose which of the five quantities to solve for: starting amount, payment, ending balance, time or rate of return. The tool simulates every payment period at the per-payment rate implied by your annual return and compounding, so it also handles yearly payment increases, deferred income and perpetuities.

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

In an ordinary annuity each payment happens at the end of its period, so the first one is one period away. In an annuity due each payment happens at the start of its period, so the first is immediate. Money paid in earlier earns one extra period of return, and income drawn earlier leaves slightly less behind to earn, so an annuity due pays a little less income from the same balance.

Is an annuity's payout rate the same as its return?

No. The payout rate is the first year's income divided by what you paid, and part of every payment is your own money coming back. For example, 100,000 that buys 600 a month for 20 years has a 7.20% payout rate but an implied return of only about 3.886% a year. Use Solve for → Implied return to see the real figure.

How much money do I need for an income that lasts forever?

A level perpetuity needs a balance whose interest covers each payment: at 4% a year, 500,000 supports about 1,636.87 a month forever. If the income must also rise each year, the balance must be larger, because it has to grow as fast as the income; the growing-perpetuity (Gordon) formula PMT ÷ (return − growth) captures this.

Why does delaying the start of an income raise the payment?

While you wait, the whole balance keeps earning a return and no money is paid out. At 5% compounded monthly, 100,000 grows to about 164,700.95 over 10 years, so a 20-year income from then pays 1,086.95 a month instead of 659.96 if it started today.

Can this model a lifetime annuity from an insurance company?

Not exactly. This tool models a fixed term (or a perpetuity), while a lifetime annuity pays until death and is priced by pooling longevity risk across many buyers. For a rough check, enter a life expectancy as the term and compare the insurer's quoted income with the result, keeping in mind fees, taxes and mortality pricing are not included.