Financial Calculators
Annuity Payout Calculator
Calculate annuity present value, future value, and payment amounts. Supports ordinary annuities and annuities-due at any interest rate.
Your inputs are saved in this browser only. No data is ever sent to a server, and saved values won't be visible in other browsers or devices.
Present Value
$2,336.24
Future Value
$2,455.77
Total Paid
$2,400.00
Total Interest
$55.77
Types of annuities
- Fixed annuity: The insurance company guarantees a specific interest rate for a set period. Like a CD but issued by an insurer. Predictable income, no market risk.
- Variable annuity: Your premium is invested in sub-accounts (similar to mutual funds). Returns depend on market performance. Higher growth potential, but also risk of loss. Typically carries higher fees (1–3% annually).
- Fixed-indexed annuity: Returns are linked to a market index (e.g., S&P 500) with a floor of 0% (you can’t lose money) and a cap or participation rate limiting upside. A middle ground between fixed and variable.
- Immediate annuity (SPIA): You pay a lump sum and receive income payments starting within one month. Often used to convert a retirement nest egg into guaranteed lifetime income.
- Deferred annuity: Accumulation phase now, income payments later. Can be fixed, variable, or indexed.
Present value vs. future value
- Present value (PV): How much a series of future annuity payments is worth in today’s dollars. Used to determine a fair lump-sum buyout price or to compare an annuity offer against other investments.
- Future value (FV): How much a series of equal contributions will grow to by a future date, assuming a given rate of return. Used to project how a deferred annuity will accumulate before the payout phase begins.
The annuity present-value formula
For an ordinary annuity (payments at end of each period), the present value is:
PV = PMT × [1 − (1 + r)^⁻ⁿ] / rWhere PMT = payment amount, r = periodic interest rate, n = number of periods.
Worked example: Receiving $1,000/month for 20 years at 5% annual rate:
- PMT = $1,000 | r = 0.05/12 ≈ 0.004167 | n = 240
- PV = $1,000 × [1 − (1.004167)^⁻²⁴⁰] / 0.004167 ≈ $151,525
Annuity vs. lump sum: key questions
- How long do you expect to live? Annuities favor longevity; a lump sum is better if life expectancy is below average.
- Do you have other guaranteed income? Social Security + pension may make an annuity redundant.
- How sensitive are you to inflation? Fixed annuity payments lose purchasing power over time unless inflation-adjusted riders are included.
- What is your investment confidence? A lump sum requires disciplined self-management; an annuity removes that burden.