How to use the annuity calculator
- Enter the starting principal, the amount you put in on day one. Use 0 if you start with nothing.
- Enter the addition and choose whether you add it every year or every month.
- Enter the annual growth rate the annuity or account credits.
- Enter the number of years.
- Choose whether additions are made at the end or the start of each period.
- Read the future value, how much of it is your money and how much is growth, and the table.
The annuity formula
The first part grows your principal for the whole term. The second part is the future value of an ordinary annuity: each addition grows from the day it goes in until the end. When additions come at the start of each period (an "annuity due"), every one of them earns one extra period of growth, so the total is higher.
For monthly additions the calculator uses the monthly rate that compounds to exactly r over a year, so the principal and the additions grow at the same yearly rate you enter.
Worked example
The defaults are $10,000 to start, $5,000 added at the end of every year, growing at 6% for 10 years.
- Growth factor: 1.06^10 = 1.790848
- Principal grows to $10,000 × 1.790848 = $17,908.48
- Additions: $5,000 × (1.790848 − 1) ÷ 0.06 = $5,000 × 13.180795 = $65,903.97
- Future value: $17,908.48 + $65,903.97 = $83,812.45
You pay in $60,000 in total, so $23,812.45 is growth. Making each addition at the start of the year instead multiplies the additions by 1.06, giving $87,766.69. Adding $400 a month instead of $5,000 a year gives $82,897.85: you add $2,000 less over ten years, but each deposit starts growing sooner.
Annuity due vs. ordinary annuity
| Same plan, $5,000 a year at 6% for 10 years | Future value |
|---|---|
| Additions at the end of each year (ordinary annuity) | $83,812.45 |
| Additions at the start of each year (annuity due) | $87,766.69 |
| Difference | $3,954.24 |
The gap is exactly one year of growth on the additions: $65,903.97 × 6% = $3,954.24.
What this calculator leaves out
Real annuity contracts often charge fees: mortality and expense charges, administrative fees and rider costs, which together often take more than 1% a year from a variable annuity. Enter a growth rate after fees for a realistic figure. Fixed annuities may credit a guaranteed rate for a few years and then reset. Withdrawals before age 59½ usually face a 10% IRS penalty on the earnings, plus income tax, and many contracts add surrender charges in the early years. When you are ready to turn the balance into income, the annuity payout calculator shows the monthly amount it can pay.
Frequently asked questions
What is the difference between an annuity and a savings account?
A deferred annuity is an insurance contract: earnings grow tax-deferred until you withdraw them, and it can later be turned into guaranteed income. A savings account pays taxable interest each year and has no surrender charges. The growth math in this calculator works for both.
How do I calculate the future value of an annuity in Excel?
Use =FV(rate, nper, -payment, -principal, type). For the default example, =FV(6%, 10, -5000, -10000, 0) returns 83,812.45; set type to 1 for additions at the start of each period.
Can I use this for an annuity with no additions?
Yes. Set the addition to 0 and the calculator shows how a single premium grows: $10,000 at 6% for 10 years becomes $17,908.48.
Does the growth rate compound monthly?
The rate you enter is a yearly rate. With yearly additions growth is added once a year; with monthly additions the calculator uses the matching monthly rate of about 0.4868%, so a full year still grows by exactly 6%.
Related calculators
- Annuity Payout Calculator — The monthly income a lump sum can pay for a set number of years, or how long a chosen payment will last.
- Compound Interest Calculator — How a starting balance and monthly contributions grow, with any compounding frequency.
- Future Value Calculator — What a sum today plus regular payments grows to, with any compounding and payments at the start or end.
- Retirement Calculator — See what your savings grow to by retirement, how long they last, and how much more to save each month.
Results are estimates for educational purposes and are not financial, tax or legal advice. See our disclaimer.