How much will your annuity pay you? Whether you're planning retirement income or evaluating an annuity purchase, our calculator shows your projected payments, growth, and total returns over any time period.
FV = Future value of the annuity
P = Initial lump sum investment
PMT = Periodic contribution amount
r = Annual interest rate (decimal)
n = Number of compounding periods per year
t = Number of years
Payment = Amount received per period
Purchase Amount = Lump sum paid to buy the annuity
Payout Rate = Contractual annual payout percentage
Periods per Year = Number of payments per year (12, 4, or 1)
The 4% rule is a common retirement planning guideline suggesting you can withdraw 4% of your portfolio balance annually (adjusted for inflation) with a low risk of running out of money over a 30-year retirement. Our calculator uses this to estimate the monthly income your fixed annuity could provide in retirement.
Fixed annuities grow through compound interest on your initial investment plus any ongoing contributions. The longer your money compounds and the higher the return rate, the more your annuity will be worth. Immediate annuities convert a lump sum into a guaranteed income stream, with the payout rate determined by your age, life expectancy, and current interest rates at the time of purchase.
A fixed annuity guarantees a minimum interest rate for a specified period. Your money grows at a predictable rate, making it a low-risk option for conservative investors. These are popular for building retirement savings with guaranteed growth and no market exposure.
Best for: Risk-averse investors seeking guaranteed growth.
Variable annuities allow you to invest in sub-accounts (similar to mutual funds). Your returns depend on market performance, offering higher potential growth but with more risk. They often include optional riders for guaranteed minimum income or death benefits at an additional cost.
Best for: Investors willing to take market risk for growth potential.
Also known as a Single Premium Immediate Annuity (SPIA), this converts a lump sum into guaranteed regular payments that start immediately. Payments continue for life or a specified period. The payout rate depends on your age, interest rates, and the payout option selected (life only, period certain, joint life).
Best for: Retirees who want guaranteed income starting now.
With a deferred annuity, you invest money now and withdrawals begin at a future date (typically in retirement). During the accumulation phase, your money grows tax-deferred. Deferred annuities can be fixed or variable and are often used to supplement Social Security or pension income.
Best for: Pre-retirees building tax-deferred retirement savings.
An annuity is a financial contract between you and an insurance company. You make a lump-sum payment or series of payments, and in return, the insurer agrees to make periodic payments to you beginning either immediately or at some future date. Annuities are primarily used as a tool for retirement income, providing a steady cash flow during your retirement years.
The two main phases of an annuity are the accumulation phase (when your money grows) and the payout phase (when you receive payments). During the accumulation phase, your contributions grow on a tax-deferred basis, which can significantly enhance your long-term returns through the power of compound interest. The payout phase converts your accumulated balance into a stream of guaranteed income.
Choosing the right type of annuity depends on your financial goals, risk tolerance, and when you need income. Understanding the key differences between the main types of annuities can help you make a more informed decision about which product aligns with your retirement strategy.
Your money earns a guaranteed minimum interest rate for a set period. Fixed annuities are simple, predictable, and carry no market risk. They are ideal for conservative investors who want to ensure their principal is safe while earning a steady, guaranteed return. The trade-off is that returns are typically lower than what you might earn in the stock market over the long term.
Best for: Safety-focused investors nearing or in retirement.
Variable annuities allow you to allocate your premiums among various investment options (sub-accounts). Your returns fluctuate with market performance — there is potential for higher growth but also risk of loss. Many variable annuities offer optional guarantees like a guaranteed minimum income benefit (GMIB) or death benefit for an additional fee.
Best for: Growth-oriented investors comfortable with market volatility.
A Single Premium Immediate Annuity (SPIA) is the simplest income-focused annuity. You pay a lump sum and start receiving payments right away — typically for life. The insurer pools risk across many annuitants, so those who live longer benefit from the contributions of those who don't. SPIAs offer the highest guaranteed income per dollar invested of any annuity type.
Best for: Retirees seeking maximum guaranteed lifetime income.
The time value of money is the single most important concept in annuity planning. The earlier you start contributing to a fixed or deferred annuity, the more time your money has to compound. Even small differences in starting age or contribution amounts can lead to dramatically different outcomes over 20, 30, or 40 years.
| Starting Age | Monthly Contribution | Years of Growth | Future Value at 65* |
|---|---|---|---|
| 25 | $500 | 40 | $995,745 |
| 35 | $500 | 30 | $502,257 |
| 45 | $500 | 20 | $230,138 |
| 55 | $500 | 10 | $81,940 |
* Assumes 6% annual return compounded monthly. Starting with $0 initial investment. For illustration only.
Explore our other free financial calculators to help with your planning.
Educational Purposes Only: This annuity calculator is provided for educational and informational purposes only. Results are estimates based on the information you provide and standard financial formulas. They do not constitute financial advice, a guarantee of returns, or a commitment from any insurance company. Actual annuity payments and returns depend on many factors including the specific contract terms, insurance company financial strength, fees and expenses, current interest rates, your age and health, and market conditions. Always consult with a qualified financial professional and review all contract documents before purchasing an annuity or making financial decisions.