Annuity Calculator

What this calculator does

Put some money aside, keep adding to it regularly, let it grow year after year, and where do you end up? That is the question this calculator answers. You give it a starting amount, the contributions you plan to keep making, a growth rate, and a number of years, and it projects the future value: what the whole thing is worth at the finish, how much you put in, and how much of the total is growth rather than your own money.

What an annuity means here

The word annuity gets used for a few different things, so it is worth being clear. Here it means a series of regular contributions made over time, growing at a steady rate. This is the saving-up, accumulation sense of the word: you are building a pot by paying into it again and again while it compounds.

That makes this tool a way to see the future value of a savings habit. Whether you are picturing a retirement pot, a long-term goal, or just what steady contributions add up to, the calculator turns your plan into a single number at the end, and shows how much of that number your contributions built versus how much the growth added on top.

The timing choice: beginning or end

There is one setting here that quietly matters more than people expect: whether you add your contribution at the beginning or the end of each period. In the language of annuities, adding at the beginning makes it an annuity due, and adding at the end makes it an ordinary annuity.

Why does it change anything? Because money added at the start of a period is in the pot for that whole period, so it earns that period's growth. Money added at the end just misses out on it. Over one period the gap is small, but repeated across many years it adds up to a real difference in the final figure. Same contributions, same rate, same years, just a different moment of paying in, and the beginning option always finishes ahead.

A worked example

Say you start with 10,000, add 500 a month, expect 6% annual growth, and leave it for 10 years, contributing at the end of each period.

The pot finishes at $96,993.25. Of that, $60,000 is money you put in, the starting 10,000 plus 500 a month for ten years, and the remaining $26,993.25 is growth the pot earned along the way. Now switch the timing to the beginning of each period, and the same plan ends at $101,738.33 instead. That extra $4,745 came from nothing but paying in a little sooner each time. It is a neat illustration of why, when you can, adding at the start of the period rather than the end quietly works in your favour.

Reading the year-by-year schedule

The table breaks the journey down one year at a time, with columns for the year, the addition made that year, the return earned, and the balance at the end of it. Watch the return column climb year on year: as the balance grows, the same growth rate produces a bigger and bigger amount, which is compounding doing its work.

One thing to note as you read the first row. In year one, the addition column folds in your starting principal along with that year's contributions, so the first figure looks larger than the steady contributions that follow. After that, each year's addition settles to your regular contribution amount. To watch a single lump grow without regular contributions, our compound interest calculator is the tool, and for the specific future-value-of-an-annuity view, the future value of annuity calculator covers it too.

How to use it

• Starting principal. The amount you begin with, before any contributions.
• Annual addition and Monthly addition. The contributions you plan to add each year and each month. The tool combines them into a yearly figure.
• Add at each period's beginning or end. Beginning for an annuity due, end for an ordinary annuity.
• Annual growth rate. The rate you expect the pot to grow, as a percentage.
• After (years). How many years to project, from 1 to 100.

The growth is applied once a year, with your monthly additions gathered into each year's contribution, so treat the result as an annual projection. Press Calculate for the totals and the schedule, and Reset to clear it.

Questions people ask

What is the difference between an annuity due and an ordinary annuity?

An annuity due adds each contribution at the beginning of the period, while an ordinary annuity adds it at the end. Because beginning contributions are invested for the whole period, an annuity due grows to a slightly larger final value than an ordinary annuity with the same inputs.

Does it compound monthly?

The growth is applied once a year, and your monthly additions are gathered into a single yearly contribution. That makes it an annual projection. Compounding monthly would produce a slightly higher figure, so treat this as a clean yearly estimate.

What is the future value of an annuity?

It is what a series of regular contributions grows to by a future date, once growth has been added over the whole period. This calculator shows that future value along with how much of it is your contributions and how much is growth.

References

The future value of a series of contributions, and the distinction between an annuity due and an ordinary annuity, follow the standard financial mathematics in Broverman's text. The compounding that drives the growth follows the U.S. Securities and Exchange Commission's investor education.

1. Broverman, S. A. Mathematics of Investment and Credit (annuities and future value). ACTEX Publications.
2. U.S. Securities and Exchange Commission. Compound interest, Investor.gov. investor.gov