Annuity Calculator
Calculate the future value of your annuity payments and see how your regular investments will grow.
What is an annuity?
An annuity is a series of equal payments made at regular intervals. It can be used for retirement planning (401k, IRA contributions), investments, savings goals, or understanding loan amortization in reverse. Regular contributions compound over time to build wealth.
How is future value calculated?
Future value is calculated using the annuity formula: FV = P × [(1+r)^n - 1] / r, where P is payment amount, r is interest rate per period, and n is number of periods. This accounts for compound interest on each payment. For example, $500/month at 7% annual (0.583% monthly) for 30 years = $566,764.
What's the difference from a lump sum?
Annuities involve regular payments over time, while lump sum investments are one-time deposits. Annuities benefit from dollar-cost averaging (buying at various market prices) and are easier to sustain from regular income. Lump sums may earn more if invested early, but annuities are more practical for most people.
Should I increase payment amount or frequency?
Both help! Increasing payment amount has a bigger impact on final value. However, more frequent payments (weekly vs monthly) can slightly increase returns through more frequent compounding. Focus on increasing the amount you can consistently afford first.