Future Value of Annuity Calculator
Annuity Growth Over Time
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Future Value of Annuity Calculator: Complete Guide
Learn how regular payments grow over time with compound interest. Simple explanations, formulas, examples, and answers to 16 common questions.
Try Our Annuity Calculator
See how your regular payments can grow over time with compound interest. Calculate future values, compare scenarios, and plan your financial future.
What is an Annuity?
An annuity is a series of regular payments made at equal intervals. Think of it like a savings plan where you put away the same amount of money every month, quarter, or year. Our calculator shows you how much that money will grow over time thanks to compound interest.
Real-Life Example
If you save $500 every month for 20 years at 6% annual interest, you'll have about $231,000! You only contributed $120,000 - the extra $111,000 comes from compound interest.
Key Features of Our Annuity Calculator
50+ Currencies
Calculate in US Dollars, Euros, Pounds, Yen, or any of 50+ global currencies with automatic symbol display.
Calculation History
Save your calculations, compare different scenarios, and track your financial planning over time.
Visual Charts
See your money grow with beautiful visual charts showing contributions vs. interest over time.
Export Results
Save your calculations as PDF, HTML, or text files for sharing with financial advisors.
Understanding All Calculator Fields
1. Regular Payment Amount
This is the amount you plan to save or invest regularly. It could be $100 per month, $500 per quarter, or $1,000 per year.
2. Annual Interest Rate (%)
The yearly interest rate your investment earns. This is usually expressed as an annual percentage (like 5% per year).
3. Number of Years
How long you plan to make these regular payments. The longer the time, the more compound interest works for you.
4. Compounding Frequency
How often interest is calculated and added to your balance. More frequent compounding = more growth.
| Frequency | Times per Year | Example |
|---|---|---|
| Annually | 1 | Interest added once per year |
| Semi-Annually | 2 | Interest added every 6 months |
| Quarterly | 4 | Interest added every 3 months |
| Monthly | 12 | Interest added every month |
| Daily | 365 | Interest added every day |
5. Payment Frequency
How often you make your regular payments. This should match your income schedule or savings plan.
6. Annuity Type
When payments are made during each period.
| Type | When Paid | Best For |
|---|---|---|
| Ordinary Annuity | End of period | Most savings plans, retirement accounts |
| Annuity Due | Beginning of period | Rent payments, insurance premiums |
Quick Tip: Why Annuity Due Grows Faster
With Annuity Due, payments earn interest for the entire period. With Ordinary Annuity, they earn interest starting next period. This small timing difference adds up over many years!
The Annuity Formula Explained
Future Value of Annuity Formula
Let's break this down piece by piece:
- FV = Future Value (what we're calculating)
- PMT = Regular Payment Amount (your savings)
- r = Periodic Interest Rate (annual rate ÷ compounding frequency)
- n = Total Number of Payments (years × payment frequency)
Example Calculation
Let's say you save $100 every month for 5 years at 6% annual interest, compounded monthly:
Number of payments = 5 years × 12 months = 60
FV = $100 × [(1 + 0.005)⁶⁰ - 1] ÷ 0.005
FV = $100 × [1.34885 - 1] ÷ 0.005
FV = $100 × 0.34885 ÷ 0.005
FV = $100 × 69.77 = $6,977
Your $6,000 in savings grew to $6,977 thanks to compound interest!
Step-by-Step: How to Use the Calculator
Step 1: Enter Your Savings Plan
Start with the basics: how much can you save regularly? Be realistic - consistency matters more than large amounts.
Step 2: Set Your Investment Details
Choose an interest rate based on your investment type (savings account, bonds, stocks).
Step 3: Choose Time Period
The longer your time horizon, the more compound interest works its magic.
Step 4: Select Frequencies
Match payment frequency to your income schedule. Choose compounding based on your investment.
Step 5: Calculate and Analyze
Click calculate to see your results, then try different scenarios to find the best plan for you.
Pro Tip: The Rule of 72
To estimate how long it takes your money to double, divide 72 by your interest rate. At 6% interest, money doubles in about 12 years (72 ÷ 6 = 12).
16 Frequently Asked Questions
Ordinary Annuity: Payments at the END of each period (like rent you pay at the end of the month).
Annuity Due: Payments at the BEGINNING of each period (like insurance premiums paid upfront).
Annuity due grows slightly faster because payments earn interest for the entire period.
More frequent compounding = more growth, but the difference becomes small with high frequencies. Monthly compounding is excellent for most purposes. Daily compounding offers only slightly better returns than monthly.
It depends on your investment:
- Savings accounts: 0.5-2%
- Bonds: 2-5%
- Stock market (long-term average): 7-10%
- Real estate: 4-8%
For retirement planning, many use 6-8% as a conservative estimate.
Monthly payments generally give better results because your money starts earning interest sooner. However, choose what matches your cash flow. If you get paid monthly, save monthly. If you're a freelancer paid quarterly, save quarterly.
Missing payments reduces your final amount, but don't let perfection be the enemy of good. What matters most is consistency over the long term. Even irregular savings are better than no savings at all.
Inflation reduces purchasing power. If you earn 5% interest but inflation is 3%, your real return is only 2%. Our calculator shows nominal returns. For real (inflation-adjusted) returns, subtract expected inflation from your interest rate.
This calculator assumes fixed payments. In reality, you can increase payments as your income grows. Try calculating with different amounts to see how increasing payments affects your final value.
Taxes reduce your effective return. Interest may be taxed as ordinary income. Tax-advantaged accounts (like 401(k)s or IRAs) let your money grow tax-free or tax-deferred, significantly boosting returns.
The calculations are mathematically precise for fixed inputs. However, real-world returns fluctuate. Use this as a planning tool, not a guarantee. Regular reviews and adjustments are important.
The actual annual return considering compounding frequency. 5% compounded monthly gives an effective rate of about 5.12%. This shows the true annual growth rate.
Click "Save to History" after any calculation. You can save up to 50 calculations, compare different scenarios, and export them for future reference or to share with a financial advisor.
Yes! Choose from 50+ currencies. The calculator automatically shows the correct currency symbol and formats numbers appropriately for each currency.
That's a different calculation called "Present Value of Annuity." Our calculator shows growth during the accumulation phase. For withdrawal planning, you'd need to calculate how much you can withdraw without running out of money.
This shows how regular retirement contributions grow. If you save $500/month for 30 years at 7%, you'll have about $567,000. This helps set realistic savings goals and understand the power of starting early.
How many times your total contributions grew. If you contributed $10,000 and ended with $20,000, your growth multiple is 2x. This shows investment efficiency regardless of the dollar amount.
This calculator is for savings growth. For loans, you'd use a present value calculation. However, the same mathematical principles apply - just from the lender's perspective instead of the saver's.
Common Annuity Scenarios
Student Loan Repayment
If you save the amount of a student loan payment ($300/month) for 10 years at 5% interest after paying off loans, you'll have about $46,000 saved!
House Down Payment
Saving $1,000/month for 5 years at 3% interest gives you about $64,000 for a down payment on a house.
Retirement Planning
$500/month for 30 years at 7% grows to approximately $567,000. Start at age 35, retire at 65 with half a million dollars!
College Fund
Saving $200/month from birth to age 18 at 6% interest creates about $77,000 for college expenses.
The Most Important Factor: Time
Starting early makes an enormous difference. If you save $300/month starting at age 25 vs. 35 (both until 65 at 7%):
Starting at 25: $720,000
Starting at 35: $340,000
That 10-year delay costs you $380,000!
Getting Started with Your Savings Plan
- Start Small but Start Now: Even $50/month is better than $0
- Be Consistent: Regular savings beat occasional large deposits
- Automate It: Set up automatic transfers to your savings account
- Increase Gradually: Boost savings when you get raises
- Review Annually: Check progress and adjust as needed
- Stay the Course: Don't stop during market downturns
Key Takeaways
Start Early
Time is your greatest ally in building wealth through compound interest.
Be Consistent
Regular, automated savings work better than occasional large deposits.
Understand Rates
Small differences in interest rates create huge differences over decades.
Use Compounding
More frequent compounding (monthly vs. annually) boosts your returns.