About the Annuity Calculator
An annuity calculator finds the future value of a series of equal payments earning interest. Annuities in this general sense describe any regular payment stream — pension contributions, savings deposits, or loan repayments viewed from the lender's side.
The formula
Ordinary: FV = PMT · [((1 + r)ⁿ − 1) / r]PMT is the payment per period, r the periodic rate, n the number of periods. An annuity-due, paying at the start of each period, multiplies the result by (1 + r).
How to use this calculator
- 1Enter your Regular Payment ($). The field starts at
1000, which you can overwrite. - 2Enter your Annual Interest Rate (%). The field starts at
5, which you can overwrite. - 3Enter your Duration (Years). The field starts at
20, which you can overwrite. - 4Enter your Type (1=Ordinary, 2=Annuity-Due). The field starts at
1, which you can overwrite. - 5Read the result straight away — it recalculates as you type, so there is no button to press. Use Share to copy a link that reopens the page with your exact numbers filled in.
Worked example
| Input | Value |
|---|---|
| Regular Payment ($) | 1000 |
| Annual Interest Rate (%) | 5 |
| Duration (Years) | 20 |
| Type (1=Ordinary, 2=Annuity-Due) | 1 |
Result
Future Value: $411,033.67
Total Paid: $240,000
Total Interest: $171,033.67
Those are the values the page loads with, so you can reproduce this result yourself and then change one field at a time to see what drives the outcome.
Understanding your result
The timing distinction matters more than it looks. An annuity-due pays at the start of each period, so every payment earns interest for one extra period. Over twenty years at 5 percent, that timing difference alone adds 5 percent to the final value for identical contributions.
The same formula describes both sides of many financial arrangements. Contributing 1,000 a year to a pension is an annuity from your perspective; receiving 1,000 a year from an insurer is an annuity from theirs. Understanding it once covers savings plans, bond coupons, lease payments, and structured settlements.
Things worth knowing
- Annuity-due payments are worth (1 + r) times ordinary annuity payments, all else equal.
- Keep rate and period consistent. Monthly payments require the annual rate divided by 12.
- A commercial annuity product is a different thing — an insurance contract with fees and surrender charges.
- A perpetuity, paying forever, has present value PMT / r.
- Growing annuities, where payments rise each period, need a modified formula that accounts for the growth rate.
Frequently asked questions
What is an annuity?+
A series of equal payments at regular intervals. In finance the term describes the payment pattern, whether that is pension contributions, bond coupons, or loan repayments.
What is the difference between ordinary annuity and annuity-due?+
Ordinary annuities pay at the end of each period, annuities-due at the beginning. Because each payment earns interest for an extra period, an annuity-due is worth (1 + r) times more.
Is a commercial annuity product a good investment?+
It depends on your circumstances. Insurance annuities provide guaranteed income and longevity protection but often carry high fees, surrender charges, and limited liquidity. Read the contract carefully and compare against alternatives.
What is a perpetuity?+
An annuity with no end date. Its present value is simply the payment divided by the rate, because payments far in the future contribute almost nothing once discounted.