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Annuity Calculator
An annuity is a retirement vehicle in which an amount is is invested each year and the interest rate remains fixed. Our annuity calculator is very similar to a savings calculator, and will allow you to project the value of your annuity once you know your fixed values. (To learn more about annuities, take a look at our annuity guide.)
For the purpose of this calculator, the three items that you need to know are:
- Annual amount to invest in the annuity.
- The number of years to invest.
- The interest rate on the annuity.
To see the math behind an annuity, we can look at a simple example. The interest rate formula used in your annuity calculation is a compound interest formula:
Principal x ( 1 + Rate )years = Total
You would do the calculation listed above to figure out what the total is for each year. You would simply replace the years value to reflect each year of the contract. After calculating each year individually, you would sum the numbers to obtain the total dollar value at the end of the years selected.
Let's calculate a value based upon an annual investment amount of $2,400.
The number of years that we will use is 5.
We will use an interest rate of 7%.
The total annuity value after 5 years will be $14,767.90
The calculations are rather straighforward. You can use the following calculator to do all of the hard math for you. Knowing what is going on with the actual calculation will help you to understand the final number.
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