Annuity Calculator
Compute future value, present value, or required payment for ordinary annuities and annuities due
Annuity Settings
Calculation Results
Future Value
$231.02K
$231,020.45
Total Contributed
$120.00K
Interest Earned
$111.02K
Type: Ordinary Annuity (payments at end of each period)
Periods: 20 years × 12/yr = 240 total periods
Complete Guide to Annuity Calculations
What Is an Annuity?
An annuity is a financial product or cash-flow pattern consisting of equal payments made at regular intervals. Annuities are fundamental in retirement planning, loan amortisation, lease valuation, and insurance payouts. The two core questions are: what is a stream of future payments worth today (present value), and what will regular contributions grow to over time (future value)?
If you already know the future value you want to reach, use the Payment Amount mode to solve for the periodic deposit. For simpler periodic investment projections, see the SIP Calculator. To discount a single lump-sum cash flow rather than a stream, try the NPV Calculator.
Annuity Formulas
Future Value of an Ordinary Annuity:
FV = PMT × [(1 + r)ⁿ − 1] / r
Where: PMT = periodic payment, r = rate per period, n = total periods
Present Value of an Ordinary Annuity:
PV = PMT × [1 − (1 + r)⁻ⁿ] / r
Where: PV = lump sum equivalent today of the annuity stream
Annuity Due Adjustment:
FV_due = FV_ordinary × (1 + r)
PV_due = PV_ordinary × (1 + r)
Benefits of Annuity Planning
Predictable Income
Annuities provide a guaranteed stream of payments, making budgeting straightforward during retirement or for fixed obligations.
Goal-Based Savings
The payment solver tells you exactly how much to save each period to hit a target — removing guesswork from long-term planning.
Fair Valuation
Present value calculations let you compare lump-sum offers against periodic payment streams on an equal footing.
Compound Growth
Regular contributions amplify compound interest — even small monthly deposits grow substantially over decades. See the Compound Interest Calculator for lump-sum compounding.
Tips for Using Annuity Calculations
Match Frequency: If you make monthly payments, set compounding to monthly (12). Mismatched frequencies produce inaccurate results.
Use Real Rates: For inflation-adjusted planning, subtract expected inflation from the nominal rate. A 7% nominal rate with 3% inflation is roughly 4% real. The Inflation Calculator can help quantify purchasing-power erosion.
Annuity Due for Rent/Leases: Lease payments are typically due at the start of each period, making them annuities due. Choosing the wrong type undervalues the obligation.
Common Mistakes
Confusing Ordinary vs. Due
Choosing the wrong annuity type shifts every payment by one period. Over 20 years at 6%, this can mean thousands of dollars of difference in the final value.
Ignoring Compounding Frequency
A 6% annual rate compounded monthly yields more than 6% compounded annually. Always match the compounding frequency to the actual terms of the financial product.
Forgetting Taxes and Fees
Annuity products often carry management fees (1–3%) and tax implications on withdrawals. The calculator shows gross mathematical results — net returns will be lower after fees and taxes.
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OpenNPV Calculator
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OpenFrequently Asked Questions
What is an annuity and how does it work?
An annuity is a series of equal payments made at regular intervals over a fixed period. It can represent deposits you make into a savings plan (accumulation phase) or periodic withdrawals from a lump sum (distribution phase). The two main types are ordinary annuities (payments at end of each period) and annuities due (payments at beginning).
What is the formula for the future value of an annuity?
For an ordinary annuity: FV = PMT × [(1 + r)ⁿ − 1] / r, where PMT is the periodic payment, r is the interest rate per period, and n is the total number of periods. For an annuity due, multiply the result by (1 + r) since each payment earns one extra period of interest.
What is the difference between an ordinary annuity and an annuity due?
In an ordinary annuity, payments occur at the end of each period (e.g. month-end salary deposits). In an annuity due, payments occur at the beginning (e.g. rent paid on the 1st). An annuity due always yields a higher future value and present value than an ordinary annuity with the same terms, because each payment compounds for one additional period.
How does this differ from the SIP Calculator?
The SIP Calculator focuses on the future value of periodic investments (equivalent to FV of an ordinary annuity). This Annuity Calculator is broader: it also computes present value of an annuity stream and solves for the required payment amount given a target value. It also supports annuity-due timing, which SIP does not.
How do I calculate how much I need to save each month to reach a goal?
Use the Payment Amount mode. Enter your target value (e.g. $100,000), the expected annual interest rate, the number of years, and the compounding frequency. The calculator solves for the periodic payment needed via PMT = FV × r / [(1 + r)ⁿ − 1]. For example, at 6% annual rate compounded monthly over 20 years, you need about $216.43 per month to reach $100,000.
What is the present value of an annuity used for?
Present value tells you the lump sum equivalent of a stream of future payments, discounted at a given rate. It is used to price bonds, value pension payouts, evaluate lease agreements, and determine fair settlement amounts. The formula is PV = PMT × [1 − (1 + r)⁻ⁿ] / r.