Annuity Calculator

This calculator has two modes:

• Payout mode: start with a lump sum (like a retirement account or insurance annuity purchase) and calculate how much you can withdraw each month over a set number of years. The remaining balance continues to earn returns while you withdraw.
• Savings mode: make regular monthly contributions and calculate how much the annuity will be worth at the end of the accumulation period. This is how deferred annuities work.

For the payout mode, a $500,000 balance at 5% annual return over 20 years generates $3,299/month. The account earns interest during the payout period, which is why you receive more than $500,000/20 years = $2,083/month.

For the savings mode, paying $500/month at 5% for 20 years produces $205,516, on $120,000 in contributions. The extra $85,516 is interest compounding over time.

Payout (present value annuity formula):

PMT = PV × r / (1 - (1 + r)^(-n))

• PMT = monthly payment
• PV = starting balance (present value)
• r = monthly interest rate (annual rate / 12)
• n = total number of payments

Savings (future value annuity formula):

FV = PMT × ((1 + r)^n - 1) / r

This is the same formula used for mortgage and loan calculations in reverse. Both formulas assume end-of-period payments (ordinary annuity). An annuity-due (payments at the beginning of each period) produces slightly different results but is uncommon for retirement calculations.