Annuity Calculator
By Talcart · Last updated July 10, 2026
Annuity Calculator Guide
Understanding Annuities
Types of Annuities
- Ordinary Annuity: Payments at the end of each period
- Annuity Due: Payments at the beginning of each period
Formula
- Future Value = PMT × ((1 + r)^n - 1) / r
- Where: PMT = Payment, r = Interest rate per period, n = Number of periods
- Example: $1,000 monthly at 6% annual rate for 10 years
Annuity Calculator
This annuity calculator computes what a stream of equal payments is worth, either in the future or today: for example, $200 invested monthly at 6% annual interest becomes $92,408.18 after 20 years. It handles both ordinary annuities (payments at period end) and annuities due (payments at period start), covering retirement income, pensions, and structured savings plans.
Key facts
- $200 invested monthly at 6% (compounded monthly) grows to $32,775.87 in 10 years, $92,408.18 in 20 years, and $200,903.01 in 30 years.
- An annuity due is always worth exactly (1 + periodic rate) times the equivalent ordinary annuity, because every payment earns one extra period of interest.
- The present value of $1,000 per year for 20 years is $12,462.21 at a 5% discount rate, but only $9,818.15 at 8% -- higher rates shrink the value of future payments.
What is the Annuity Calculator?
An annuity is a series of equal payments made at fixed intervals over a defined period, valued using compound interest mathematics. The two core measurements are future value (what the payment stream accumulates to by the final period) and present value (the single lump sum today that is financially equivalent to the whole stream). An "ordinary annuity" pays at the end of each period, like most loan payments; an "annuity due" pays at the start, like rent, and is always worth slightly more.
How does the Annuity Calculator work?
For future value, the calculator applies FV = PMT x ((1 + r)^n - 1) / r, where r is the periodic rate (annual rate divided by payments per year) and n is the total number of payments. Each payment compounds forward from the moment it is made. Present value reverses the process: PV = PMT x (1 - (1 + r)^-n) / r discounts every payment back to today. For an annuity due, both results are multiplied by (1 + r) because each payment earns one extra period of interest.
What is the Annuity Calculator formula?
- PMT – periodic payment
- r – periodic rate
- n – number of periods
Future Value of Monthly Payments (Ordinary Annuity, Monthly Compounding)
| Monthly Payment | Annual Rate | 10 Years | 20 Years | 30 Years |
|---|---|---|---|---|
| $200 | 6% | $32,775.87 | $92,408.18 | $200,903.01 |
| $300 | 4% | $44,174.94 | $110,032.39 | $208,214.82 |
| $300 | 6% | $49,163.80 | $138,612.27 | $301,354.51 |
| $300 | 8% | $54,883.81 | $176,706.12 | $447,107.83 |
| $500 | 6% | $81,939.67 | $231,020.45 | $502,257.52 |
| $500 | 7% | $86,542.40 | $260,463.33 | $609,985.50 |
How do you use the Annuity Calculator?
- Choose annuity type (ordinary or due).
- Enter the periodic payment, rate, and number of periods.
- Read the future value (and present value, if needed).
Worked example
| Scenario | $200/month at 6% annual for 20 years (ordinary) |
| Calculation | FV = 200 × ((1.005)^240 − 1) / 0.005 |
| Result | FV ≈ $92,408. |
Common use cases
Tips & best practices
Annuity-due payments grow ~r% more than ordinary annuities — small but compounding difference.
Frequently asked questions
An ordinary annuity pays at the end of each period, while an annuity due pays at the beginning, so every annuity-due payment earns one extra period of interest. Mathematically, the annuity-due value equals the ordinary value multiplied by (1 + r). At a 6% annual rate paid monthly, that is a 0.5% uplift on the entire balance. Loan payments are typically ordinary; rent and insurance premiums are typically due.
At a 6% annual return compounded monthly, $500 invested at the end of every month grows to $231,020.45 in 20 years, of which only $120,000 is your own contributions. At 7% the same plan reaches $260,463.33, and over 30 years it reaches $609,985.50. Small rate differences compound into large gaps over long horizons.
Present value tells you what a future payment stream is worth as a single lump sum today, which is how pensions, lottery payouts, and structured settlements are priced. For example, $1,000 per year for 20 years discounted at 5% has a present value of $12,462.21, not $20,000, because later payments are worth less in today's dollars.
An annuity values a series of repeated payments, while lump-sum compound interest grows a single deposit. In an annuity, each payment compounds for a different length of time: the first monthly payment in a 20-year plan compounds for 239 months, the last for zero. The annuity formula is simply the closed-form sum of all those individual compounding terms.
Use the rate the money will actually earn: the guaranteed rate in an annuity contract, your expected portfolio return for savings projections, or a discount rate for valuing payouts. Divide the annual rate by the number of payments per year to get the periodic rate; a 6% annual rate with monthly payments means r = 0.005 per period.
Yes, withdrawals are just an annuity viewed from the other side. The present-value formula tells you the nest egg needed to support a payment stream: to withdraw $1,000 a year for 20 years while earning 8%, you need $9,818.15 today. The same math powers loan amortization, where the lender "buys" your payment stream.