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Calculate annuity payouts including fixed, variable, and indexed annuities. Estimate monthly income, total payouts, and interest earned for retirement planning.
Annuity Calculator
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Total Interest Earned
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Disclaimer: The information and calculations provided by this tool are for educational and informational purposes only and should not be construed as professional financial advice. Always consult with a qualified financial advisor before making financial decisions.
Understanding Annuities: Guaranteed Retirement Income
An annuity is a financial product that provides a series of payments at regular intervals, typically used as a retirement income tool. Insurance companies sell annuities to individuals who want guaranteed income streams during retirement. There are three main types: fixed annuities offer predictable payments at a guaranteed interest rate, variable annuities tie returns to investment portfolio performance, and indexed annuities link returns to a market index like the S&P 500 while providing downside protection.
Annuities can be immediate (payments start right away) or deferred (payments begin at a future date). Deferred annuities have an accumulation phase where your money grows tax-deferred, followed by an annuitization phase where you receive payments. Understanding these structures helps you determine whether an annuity fits your retirement strategy and how much guaranteed income you can expect.
The annuity market in the United States exceeds $300 billion in annual sales. While annuities offer valuable guarantees, they also come with fees, surrender charges, and complexity that require careful evaluation. This calculator helps you model different scenarios to understand potential payouts before committing to a specific product.
How to Use This Annuity Calculator
Follow these simple steps to get accurate results:
Enter your financial details in the calculator form above. Fill in all required fields with your specific numbers.
Review the default values and adjust them to match your situation. Default values represent common scenarios.
Click "Calculate" to see your personalized results instantly displayed below the form.
Compare scenarios by adjusting values and recalculating. Try different inputs to understand how changes affect outcomes.
Use the results to inform your financial decisions. Consider consulting a financial professional for complex situations.
Pro Tip: Bookmark this calculator and return whenever you need to run new scenarios or update your calculations with current numbers.
Annuity Payment Formula
PMT = PV × r / (1 - (1 + r)-n)
Where each variable represents:
PMT = periodic payment amount
PV = present value (initial investment)
r = periodic interest rate (annual rate / 12)
n = total number of payment periods
Worked Example
For a $100,000 annuity at 5% annual rate over 20 years (240 monthly payments): r = 0.05/12 = 0.004167 PMT = 100,000 × 0.004167 / (1 - (1.004167)-240) PMT = 416.67 / (1 - 0.3686) PMT = $659.96 per month
Limitations and Assumptions
This calculator provides estimates based on the inputs you provide and standard financial formulas. Actual results may vary due to factors such as changing interest rates, tax law modifications, fees, and individual financial circumstances. Always consult with a qualified financial professional before making major financial decisions.
Annuity Payout Comparison: Different Investment Amounts at 5% Rate
Initial Investment
10-Year Payout
15-Year Payout
20-Year Payout
25-Year Payout
$50,000
$530/mo
$395/mo
$330/mo
$292/mo
$100,000
$1,061/mo
$790/mo
$660/mo
$585/mo
$200,000
$2,121/mo
$1,581/mo
$1,320/mo
$1,169/mo
$500,000
$5,303/mo
$3,953/mo
$3,300/mo
$2,923/mo
Frequently Asked Questions
Fixed annuities guarantee a specific interest rate and predictable payments. Variable annuities invest in sub-accounts similar to mutual funds, so payments fluctuate based on investment performance. Fixed annuities offer security while variable annuities offer growth potential with more risk.
It depends on how you funded the annuity. If purchased with pre-tax money (like from a 401k), all payments are taxable as ordinary income. If purchased with after-tax money, only the earnings portion is taxable. Roth IRA annuities may provide tax-free payments.
A surrender period is a timeframe (typically 5-10 years) during which withdrawing money from an annuity incurs penalties called surrender charges. These charges typically start at 7-10% and decrease annually until the surrender period ends.
Annuities are most suitable for people nearing or in retirement who want guaranteed income, have already maxed out other tax-advantaged accounts, and want to ensure they do not outlive their savings. They are less suitable for young investors who benefit more from market growth.
This depends on the annuity contract. Some annuities offer death benefits that pass remaining value to beneficiaries. Life-only annuities provide the highest payments but stop at death with no remaining value. Joint-and-survivor annuities continue payments to a surviving spouse at a reduced rate.
