To use the annuity calculator, input your initial investment, expected annual additions, and the annual interest rate. Select the compounding frequency and the timing of your additions. Finally, choose your payout frequency and the age you wish to start receiving payouts. The calculator will provide an estimate of your annuity's future value and potential payouts.
The annuity calculator uses the future value of an annuity formula: FV = P * ((1 + r)^nt - 1) / r + A * ((1 + r)^nt - 1) / r, where P is the principal, r is the interest rate per period, n is the number of compounding periods per year, t is the number of years, and A is the annual addition.
Suppose you invest $10,000 initially with an annual addition of $5,000 at an interest rate of 5% compounded annually for 20 years. The future value of your annuity would be calculated using the formula above, resulting in a substantial end balance.
When planning for retirement, consider the impact of inflation on your annuity's purchasing power. Additionally, evaluate the tax implications of your annuity payouts. For more detailed planning, consider using our Retirement Calculator and 401k Calculator.