See how an annuity grows while you pay into it: a starting principal, regular additions and a growth rate, with a year-by-year and month-by-month schedule.
An annuity is a contract, usually with an insurance company, that turns money you pay in into income later. It has two stages. During the accumulation phase you pay in and the balance grows. During the payout phase the contract pays you back. This calculator covers the first stage: how large the balance becomes after a number of years, given a starting principal, regular additions and a growth rate.
The timing of each addition matters. In an annuity due, money goes in at the start of the period and earns interest straight away. In an ordinary annuity it goes in at the end, so it sits idle until the next period. The difference grows with the length of the term and the size of the rate, which is why the beginning-of-period choice always ends a little higher.
The growth rate you enter is a yearly rate, turned into an equivalent monthly rate. Every month the calculator adds any monthly addition, applies that month's growth, and records the result. Your annual addition lands in the first month of each year, or the twelfth if you chose the end of the period. The starting principal goes in on day one. The annual table adds the twelve months of each year, and the monthly table lets you see every step.
The accumulation phase is the period when you pay money into an annuity and it grows, before any income is paid out. This calculator covers that phase. The income phase, when the annuity starts paying you, is a separate calculation.
An annuity due takes each addition at the beginning of its period, so it earns interest for the whole period. An ordinary annuity takes it at the end of the period, so it earns nothing until the next one. Adding at the beginning always gives a slightly larger balance.
The annual growth rate is converted to an equivalent monthly rate, so a 6% rate grows a balance by exactly 6% over twelve months. The calculator then adds interest to the balance every month, which also lets monthly additions earn their fair share of growth.
Yes, as an estimate. Enter the rate your contract credits, or the return you expect for a variable annuity. Remember that real annuities can charge fees, surrender charges and caps that this calculator does not include, and a variable annuity's actual return will vary.
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