Calculate the fixed monthly payout you can withdraw from a lumpsum investment over a chosen number of years.
This tool calculates the future value or present value of an annuity — a series of equal payments made or received at regular intervals. It's used for retirement income planning, loan amortization understanding, and evaluating structured settlement or pension payment streams.
Future Value of Annuity = Payment × [((1 + r)ⁿ − 1) ÷ r]. Present Value of Annuity = Payment × [(1 − (1 + r)⁻ⁿ) ÷ r], where r is the periodic interest rate and n is the total number of payments.
Enter the periodic payment amount, interest rate, and number of periods, and the calculator returns either the future value (total accumulated) or present value (current worth) of the annuity.
Example: Depositing $500 monthly at a 6% annual return (0.5% monthly) for 20 years (240 payments) grows to a future value of approximately $500 × [((1.005)^240 − 1) ÷ 0.005] ≈ $230,995.
What's the difference between an ordinary annuity and an annuity due? An ordinary annuity makes payments at the end of each period, while an annuity due makes payments at the beginning — this timing difference means an annuity due accumulates slightly more value, since each payment has one extra period to earn returns.
How is an annuity different from a lump sum investment? An annuity involves a series of equal payments over time, while a lump sum is a single upfront amount — both can be analyzed using present and future value concepts, but the calculation structure differs.
What are common real-world examples of annuities? Common examples include retirement account contributions, mortgage or loan payments, insurance annuity products, and structured legal settlements paid out over time in equal installments.
Why would someone choose an annuity for retirement income? Annuities can provide predictable, steady income over a defined period or for life, which some retirees value for budgeting certainty, though they typically come with trade-offs like reduced liquidity and various fees depending on the specific product.
Does the interest rate assumption significantly affect annuity calculations? Yes, since annuity formulas compound growth over potentially many periods, even modest changes in the assumed interest rate can meaningfully shift the calculated present or future value, especially over longer time horizons.