Annuity
Calculate annuity payments and retirement income
Calculators on this site provide estimates for general informational purposes only. They are not financial, investment, tax, or legal advice. Consult a qualified professional before making any decision.
How to use Annuity
- 1Choose the annuity type: ordinary annuity (payments at end of period) or annuity due (payments at beginning).
- 2Enter the periodic payment, annual interest rate, number of periods, and starting principal if any.
- 3Review the future value, present value, and total interest earned.
Ordinary annuity vs annuity due
FV ordinary = PMT × (((1 + r)^n - 1) / r); FV due = FV ordinary × (1 + r)An ordinary annuity assumes each payment occurs at the end of a period, like a typical loan payment.
An annuity due assumes payments at the start of each period, which earns one extra period of interest.
The same payment stream is worth more in an annuity due because each cash flow is invested sooner.
Frequently asked questions
What is a real-world example of an annuity due?
Apartment rent and gym memberships are common examples because payment is due at the beginning of each month.
Can I use this for retirement income planning?
Yes; it gives a first-order estimate for structured payouts, though real products may include fees and riders.
Does the calculator handle inflation?
No; the rate entered is nominal. For real value, subtract expected inflation from the rate.
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