Annuity Calculator

An ordinary annuity makes payments at the end of each period (e.g., December 31 for annual payments). An annuity due makes payments at the beginning of each period (e.g., January 1). Because annuity due payments arrive sooner, the present value is higher — you receive money earlier, so it's worth more today. Switching from ordinary to annuity due increases present value and lowers the required payment for the same outcome.

Select 'Payment Amount (PMT)' as the calculation type, enter your lump sum as the present value, set the interest rate and number of periods, and choose your payment timing. The calculator computes the periodic payment amount your lump sum can sustain — whether annual, semi-annual, or monthly — until the balance reaches zero.

Inflation reduces the purchasing power of fixed payments over time. The calculator computes a real rate of return (nominal rate minus inflation rate) so you can see the effective value of your annuity in today's dollars. For example, a 5% return with 3% inflation gives a real return of about 2%, meaning your income's buying power grows much more slowly than the headline number suggests.

Yes, annuity income is generally taxed as ordinary income. The taxable portion depends on whether the annuity was purchased with pre-tax (qualified) or after-tax (non-qualified) dollars. For qualified annuities, the entire payment is taxable. For non-qualified annuities, only the earnings portion is taxable — the return of principal is tax-free. Use the tax toggle for a rough estimate, but consult a tax professional for your specific situation.

Present value (PV) tells you how much a future income stream is worth in today's dollars — useful when deciding how much to invest now. Future value (FV) tells you how much your regular contributions will grow to by a certain date — useful for accumulation goals. The calculator handles both, plus payment amount, so you can solve for whichever variable you need.