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Annuity Calculator
Use this free annuity calculator to plan a stream of regular payments. Work out the future value of monthly payments you make now, or flip to payout mode and see what monthly income a lump sum can provide — with a breakdown of what you paid in and what interest added.
Balance over time
Your balance grows as payments and interest pile up. The chart updates live with your inputs.
How it works
An annuity is a series of equal payments made at regular intervals. If you save $500 every month for 30 years, that is an annuity. If you hand an insurance company $300,000 and it pays you $2,000 a month for 20 years, that is an annuity too. The same maths covers both directions: payments growing into a lump sum, or a lump sum shrinking into payments. This calculator handles both.
Monthly payment is the regular amount in future-value mode: what you pay in each month. In payout mode, the first box becomes your lump sum instead, and the result is the monthly payment that lump sum can support. Annual interest rate is the return the money earns each year. Years is the length of the payment stream — how long you save, or how long the payouts must last. Payment timing is the one detail people usually miss: in an ordinary annuity, payments are made at the end of each month, while in an annuity due they are made at the beginning. Beginning-of-month payments earn interest for one extra month, so an annuity due is always worth a little more.
In future-value mode, the monthly rate is the annual rate divided by 12, and the number of periods is years times 12. Each payment compounds for a different length of time, and the formula adds all of those grown payments together. In payout mode, the formula works backwards: it finds the monthly payment that, with interest, uses up the lump sum exactly at the end of the term.
The breakdown tells the story. In future-value mode, total payments made is simply your monthly payment times the number of months, and interest earned is the future value minus that total. Over a long horizon the interest is usually the bigger number — that is the reward for starting early and letting compounding do its work. In payout mode, total paid out is the monthly payout times the number of months, and the difference between that and your lump sum is the interest the lump sum earned while it was being paid out. Neither mode includes taxes, fees, or inflation, and both assume a constant interest rate.
Worked example
Maria saves $500 every month for 30 years at 6% a year, with payments at the end of each month. Here is how her annuity grows, step by step.
Step 1: Find the monthly rate and the number of payments. The monthly rate is 6% ÷ 12 = 0.5% (0.005), and 30 years means 30 × 12 = 360 monthly payments.
Step 2: Work out the growth factor. (1.005)360 = 6.0226, so one dollar saved today would grow to $6.02 over 30 years at this rate.
Step 3: Apply the annuity formula. Future value = $500 × [(6.0226 − 1) ÷ 0.005] = $500 × 1,004.52 = $502,257.52.
Step 4: Split the result. Maria paid in $500 × 360 = $180,000.00, so the interest earned is $502,257.52 − $180,000.00 = $322,257.52 — almost twice what she deposited.
Step 5: Check the timing effect. If Maria had paid at the beginning of each month instead, every payment would earn one extra month of interest, and the result would be $502,257.52 × 1.005 = $504,768.81.
Enter the same numbers — $500 a month, 6%, 30 years, end of month — and the calculator shows exactly the same result: a future value of $502,257.52, from $180,000.00 paid in and $322,257.52 of interest. Switch to payout mode with a $300,000 lump sum at 6% over 20 years and it gives a monthly payout of $2,149.29.
FAQ
What is an annuity?
An annuity is a series of equal payments made at regular intervals — for example, $500 every month. You can look at it two ways: what a stream of payments will grow to in the future, or what a lump sum today is worth as a stream of monthly payouts. Retirement plans, pensions, and insurance products are all built on this idea.
What is the difference between an ordinary annuity and an annuity due?
It is only about timing. In an ordinary annuity, each payment is made at the end of the period — for example, at the end of each month. In an annuity due, each payment is made at the beginning of the period. Payments made earlier earn interest for one extra period, so an annuity due is always worth slightly more than an ordinary annuity with the same payment, rate, and term.
How do I work out the monthly payout from a lump sum?
Choose the payout mode, enter your lump sum, the annual interest rate, and how many years the payouts should last. The calculator divides the lump sum into equal monthly payments that, with interest, run out exactly at the end of the term. A longer term or a lower rate gives a smaller monthly payout, because the same money has to stretch further.
Why is the future value so much bigger than what I paid in?
Because of compound interest over a long time. Each payment earns interest, and that interest earns interest of its own. Over 30 years at 6%, the interest earned on a $500 monthly payment is larger than the total of all the payments — the money you put in roughly doubles on its own through compounding.
Does this calculator include taxes or fees?
No. The results are before taxes and fees, and they assume a constant interest rate. Real annuity products from insurance companies include fees, surrender charges, and tax rules that can change the result considerably, so use this calculator for planning and compare real products separately.