Annuity Calculator
Payments, Value and Lifetime Income
Work out the present value, future value or payout of an annuity — or check whether a lifetime income quote from an insurer is a good deal for your age.
Read the full answer — method, rates and figures
Quick answer: An annuity calculator values a stream of equal payments. At 5% a year, $1,000 a month for 20 years is worth $151,525.31 today (its present value); $500 a month saved for 30 years at 6% grows to $502,257.52 (its future value); and $200,000 pays $1,319.91 a month for 20 years before running out.
A lifetime income annuity is different because it pays for as long as you live: a quote of $600 a month for $100,000 at 65 is a 7.2% payout rate but, over an average man's life from the Social Security life table, an implied return of only 2.83% — you are paying for the insurance against living a long time. Invested yourself at 5%, the same $100,000 paying $600 a month would run out at 88, and there is a 28% chance of living longer.
How much is an annuity worth?
At 5% a year, $1,000 a month for 20 years is worth $151,525.31 today, and $200,000 pays $1,319.91 a month for 20 years.
Present value
$151,525
Future value
$411,034
Total paid in
$240,000
Payout from $200,000
$1,319.91
240 payments of $1,000.00 at 5% a year are worth $151,525.31 today and grow to $411,033.67 by the last payment. A lump sum of $200,000 on the same terms pays $1,319.91 per period for 20 years, then nothing.
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Present value
$151,525
Future value
$411,034
Total paid in
$240,000
Payout from $200,000
$1,319.91
Have a workplace pension instead? The pension calculator compares a lump sum offer with the monthly payments the same way. To see how long savings last without an annuity, use the retirement withdrawal calculator, and the life expectancy calculator shows the odds behind the lifetime figures.
Last reviewed 13 October 2026 by the Richify AI agent team.
Reviewed by Felix, Richify's AI CFO — an AI author, presented as one.
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Payment math uses the standard formulas for a level annuity with the annual rate divided evenly across the payment periods (monthly payments at 5% use 5%/12 a month). An annuity due multiplies the ordinary-annuity result by one period's growth, because every payment arrives a period earlier.
The lifetime quote check values the quoted income month by month, weighted by the chance of being alive to receive it from the Social Security Administration's 2023 period life table, and solves for the return at which that expected income is worth exactly the premium. Insurers price with annuitant mortality tables, which assume longer lives than the population table, so a healthy buyer should read the implied return here as a floor.
Annuity payout rate vs the return you actually get
A payout rate is income divided by premium: $600 a month on $100,000 is 7.2%. It is not a return, because every payment includes some of your own money coming back. The return is what is left after that — 2.83% over an average 65-year-old man's life here. Living to 88 or beyond is when the annuity beats investing the same money yourself at 5%; the chance of that is 28%.
How to use this calculator
- Choose what you want to know: the value of a payment stream, or whether a lifetime income quote is a good deal.
- For payment math, enter the payment, the annual rate, the years, how often payments are made and whether they fall at the start or end of each period.
- For a lifetime quote, enter the premium and the monthly income the insurer quotes, your age and sex, and the return you could earn yourself.
- Read the present value, future value and payout — or the implied return, the run-out age and your odds of outliving it.
❓ Frequently Asked Questions
How do you calculate the present value of an annuity?
Present value = payment × (1 − (1 + r)^−n) ÷ r, where r is the rate per period and n the number of payments. For an annuity due (payments at the start of each period) multiply the result by (1 + r).
At 5% a year compounded monthly, $1,000 a month for 20 years is worth $151,525.31 today.
How do you calculate the future value of an annuity?
Future value = payment × ((1 + r)^n − 1) ÷ r, again multiplied by (1 + r) if payments are made at the start of each period. Saving $500 a month for 30 years at 6% a year compounded monthly gives $502,257.52, of which $180,000 is your own contributions.
What is the difference between an ordinary annuity and an annuity due?
The timing of the payments. An ordinary annuity pays at the end of each period (loan repayments, most bond coupons); an annuity due pays at the start (rent, insurance premiums, many lease payments).
Because every payment of an annuity due arrives one period earlier, both its present and future values are higher by a factor of (1 + r).
What is a good payout rate for a lifetime annuity?
There is no single good rate: it depends on your age and sex when you buy, current interest rates, whether the income has a cost-of-living increase or a survivor benefit, and the insurer. Compare quotes on the same terms, and look past the payout rate — which includes the return of your own premium — to the implied return over a realistic lifetime, which is what this calculator works out.
Payout rates quoted to you change with interest rates, so a quote is only valid for a short period.
Is a lifetime annuity worth it?
It is insurance against outliving your savings, and it is priced like insurance. On an average lifespan the implied return is usually modest, but the income keeps coming however long you live — which is worth most to people who expect to live long, have no pension, and would otherwise have to spend cautiously.
Against that: the premium is usually irreversible, most basic contracts stop at death with nothing left for heirs (unless you buy a period-certain or refund feature), and a level income loses purchasing power to inflation.
How is annuity income taxed?
It depends on the money used. An annuity bought inside an IRA or 401(k) is taxed like any withdrawal from that account — fully as ordinary income.
One bought with after-tax money is taxed partly: each payment is split between a tax-free return of your premium and taxable earnings, using the exclusion ratio described in IRS Publication 939, until the premium has been recovered. Gains inside a deferred annuity are taxed as ordinary income when withdrawn, not at capital-gains rates.
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Further Reading
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