An annuity is a series of equal payments made at regular intervals over a fixed period. In finance, annuities are used in loan repayments, retirement income products, and savings plans. An annuity can be a financial contract (insurance product) or simply any stream of periodic cash flows — the math is the same.

How do I calculate annuity payments?

For an ordinary annuity: PMT = PV × [r / (1 − (1 + r)^−n)], where PV is the present value (lump sum), r is the periodic interest rate (annual rate ÷ periods per year), and n is the total number of periods. This calculator does the math automatically — just enter your lump sum, rate, and term.

How much does a $100,000 annuity pay per month?

At 5% annual interest over 20 years, a $100,000 ordinary annuity pays approximately $659.96/month. At 3% it pays about $554.60/month, and at 7% it pays about $775.30/month. Use the calculator above to get exact figures for your rate and term.

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

An ordinary annuity makes payments at the end of each period (e.g., mortgage payments, bond coupons). An annuity due makes payments at the beginning of each period (e.g., rent, lease payments). Because annuity-due payments arrive one period earlier, they earn one extra period of interest, resulting in slightly higher payouts or a slightly higher required principal.

What is the present value of an annuity?

The present value (PV) of an annuity is the lump sum you need today to fund a series of future equal payments, given a specific interest rate and term. Formula: PV = PMT × [(1 − (1 + r)^−n) / r]. The 'Required Principal' mode in this calculator computes this directly.

What is the future value of an annuity?

The future value (FV) of an annuity is the total accumulated value of a series of regular contributions at the end of a term, including compound interest. Formula: FV = PMT × [((1 + r)^n − 1) / r]. Use the 'Future Value' mode in this calculator to see how regular deposits grow over time.

What is a good interest rate for an annuity?

Fixed immediate annuity rates vary by insurer, term, and payout structure. Fixed deferred annuities generally offer lower guaranteed rates than immediate ones. Variable annuities depend on market performance and can vary widely. For planning purposes, check current quotes from multiple insurers and use this calculator to compare scenarios at different rates.

What is the difference between an immediate annuity and a deferred annuity?

An immediate annuity (SPIA) begins paying income within one period of purchase — you hand over a lump sum and payments start right away. A deferred annuity has an accumulation phase where your principal grows first, then converts to income at a future date. The 'Payout' mode models immediate annuities; the 'Future Value' mode models the accumulation phase of deferred annuities.

How does inflation affect annuity payments?

Fixed annuity payments do not change over time, so inflation erodes their purchasing power. At 3% inflation, a $660/month payment today has the equivalent purchasing power of only about $491/month after 10 years. The annuity calculator shows the inflation-adjusted value for payout and future value modes. Enter your expected inflation rate to see the real impact.

Can I use this calculator for lottery annuity payments?

Yes. Lottery jackpots are typically paid as 30-year ordinary annuities. Enter the total jackpot as the present value (lump sum equivalent), use the lottery's stated annual rate (usually 2–4%), set the term to 30 years, and choose annual frequency. The calculator will show the annual payment and full schedule.

Annuity Calculator

I have a lump sum. How much will it pay per period?

Annual Interest Rate

Lump Sum / Principal

100K

Term

Frequency

Timing

End of period (most common)

Inflation Rate (optional)

Payment per Period

$659.96

660 /mo

Worth $365 in today's USD after 20yr at 3% inflation

Total Payments

240

over 20 years

Total Paid Out

158K

$158,389

Interest Paid

58K

$58,389

Year-by-Year Schedule

Annual breakdown of payments, interest, and ending balance

Year	Payment	Interest	Balance
1	$7,919	$4,932	$97,013
2	$7,919	$4,779	$93,873
3	$7,919	$4,619	$90,572
4	$7,919	$4,450	$87,102
5	$7,919	$4,272	$83,455

What Is an Annuity?

Understanding the financial instrument behind the math

An annuity is a series of equal payments made at regular intervals over a fixed period. It underpins retirement planning, mortgage calculations, insurance products, and structured settlements.

The value of an annuity depends on the payment amount, the interest rate per period, and the number of periods. Because money earns interest over time, a dollar received today is worth more than one received next year.

Payout

Lump sum to periodic income

Future Value

Regular deposits to wealth

Required Principal

Target income to lump sum

How to Use the Annuity Calculator

Three modes, one tool

Select the mode that matches your question, enter the known values, and the annuity calculator solves for the unknown.

Payout Mode

Enter a lump sum (present value), set the interest rate and term. The annuity calculator tells you the fixed payment you can withdraw each period until the fund is depleted.

Future Value Mode

Enter a regular contribution amount, set the rate and term. See how your deposits accumulate with compound interest over time.

Required Principal Mode

Enter the periodic income you want, set the rate and term. The annuity calculator works backwards to find the lump sum you need today.

Annuity Formulas

Where r = periodic rate, n = total periods. For annuity due, multiply by (1 + r).

PayoutPMT = PV × [r / (1 − (1 + r)^−n)]

Future ValueFV = PMT × [((1 + r)^n − 1) / r]

Required PrincipalPV = PMT × [(1 − (1 + r)^−n) / r]

Worked Example

Principal

$100,000

Rate

5% / yr

Term

20 years

Frequency

Monthly

Monthly Payment

$659.96

Total Paid

$158,389

What Affects Your Annuity?

Key variables and their real-world impact

Interest Rate

The most powerful lever. A 3% vs 5% rate on $100,000 changes your monthly payout by roughly $105 over 20 years.

Term Length

A shorter term means higher payments but the money runs out sooner. A longer term stretches funds further.

Payment Frequency

Monthly payments are slightly lower than annual equivalents because the balance earns less interest per period.

Inflation

At 3% inflation, $660/month is worth only about $491 in today's dollars after 10 years.

Ordinary Annuity vs. Annuity Due

When the timing of payments changes the math

The only difference is when each payment occurs. This one-period shift means each payment in an annuity due earns (or costs) one extra period of interest.

Ordinary Annuity

Timing End of each period

Examples Mortgages, bonds, retirement

Default? Yes, use when in doubt

Annuity Due

Timing Beginning of each period

Examples Rent, leases, insurance

Effect Each deposit earns one extra period

Common Uses for Annuities

Real-world scenarios where annuities make sense

Retirement Income

Convert a nest egg into guaranteed monthly income so market volatility does not threaten your standard of living.

Structured Settlements

Spread large one-time awards such as personal injury and lottery winnings into predictable periodic payments.

Education Savings

Complement a 529 plan with guaranteed growth and a known payout schedule to fund tuition when needed.

Inheritance / Windfall

Annuitize a lump-sum inheritance to create a disciplined income stream and reduce the risk of rapid depletion.

Annuity vs. Lump Sum

Key trade-offs at a glance

The choice depends on your risk tolerance, life expectancy, and whether you need predictable income or maximum flexibility.

Annuity

Income Fixed, guaranteed payments

Longevity Income lasts the full term

Flexibility Locked in once structured

Best for Risk-averse planners

Lump Sum

Income Depends on investing skill

Longevity You may outlive the funds

Flexibility Full control, pivot any time

Best for Active investors

Things to Consider

•Inflation erodes fixed payments over long terms. Factor in a real (inflation-adjusted) rate.

•Early withdrawal from annuity products often incurs surrender charges.

•Tax treatment varies by jurisdiction. Consult a tax advisor for your specific situation.

Frequently Asked Questions

Common questions and detailed answers

Embed Annuity Calculator

Add this calculator to your website or blog for free.

Related calculators from other categories

Last updated Apr 2, 2026