Annuity Calculator
Calculate the future value of an annuity from starting principal, regular contributions, interest rate, and term — ordinary annuity or annuity due, with year-by-year growth.
Frequently Asked Questions
What is an annuity and how does it grow?
An annuity is a series of equal payments made at regular intervals — monthly deposits into a savings plan, retirement contributions, or insurance payouts. During the accumulation phase, each contribution earns compound interest, so the future value FV = PMT × [((1+i)ⁿ − 1) / i], where i is the periodic rate and n the number of periods. A $500 monthly contribution at 6% for 20 years grows to about $231,000 from $120,000 contributed.
What is the difference between an ordinary annuity and an annuity due?
In an ordinary annuity, payments occur at the end of each period; in an annuity due, at the beginning. Because each payment in an annuity due earns interest for one extra period, its future value is higher by a factor of (1 + i). Rent is typically an annuity due (paid in advance); loan payments and most savings plans are ordinary annuities.
How does compounding frequency affect an annuity?
More frequent compounding grows money slightly faster at the same nominal rate. $10,000 at 6% for 20 years becomes $32,071 compounded annually versus $33,102 compounded monthly. The effect is modest but real — what matters far more is the contribution amount, the rate, and above all the time invested, because compound growth accelerates in later years.
What is the difference between a fixed and variable annuity?
A fixed annuity guarantees a set interest rate and predictable payments — lower risk, lower growth potential. A variable annuity invests contributions in market funds, so its value fluctuates with performance. Indexed annuities sit in between, crediting interest linked to a market index with caps and floors. Fees, surrender charges, and guarantees vary significantly — compare carefully before purchasing.