Enter your initial premium, any ongoing contribution, and a fixed growth rate to project your account value at the end of the accumulation phase.
An annuity is a contract with an insurance company: you pay in money, either as a single lump sum premium or through contributions over time, and in exchange the account grows on a tax-deferred basis during an accumulation phase. Later, the accumulated balance typically converts into a stream of payments — often used as a source of guaranteed retirement income, similar in spirit to a pension but purchased individually through an insurer rather than provided by an employer.
A fixed annuity credits a set, guaranteed interest rate on the account balance, similar in mechanics to a CD — predictable but with growth capped at that rate. A variable annuity's value instead depends on the performance of underlying investment subaccounts, similar to mutual funds, meaning it can gain more in good markets but also lose value in down markets. This calculator models the fixed-rate case specifically, applying one constant growth rate throughout the accumulation period.
Once the accumulation phase ends, the annuity typically converts, or "annuitizes," into a stream of regular payments — monthly, quarterly, or annual — for a set period or for life, or the owner can instead begin taking discretionary withdrawals from the balance. Use the Annuity Payout Calculator, a companion tool, to estimate what an accumulated balance like the one above converts into as a monthly income stream.
It depends on what you're optimizing for. Annuities can offer guaranteed, predictable income and tax-deferred growth, which appeals strongly to people who prioritize stability and certainty in retirement over maximizing growth. On the other hand, they often carry fees, surrender charges for early withdrawal, and lower long-run growth potential than investing directly in the market. They're worth comparing carefully — ideally with a fee-only financial advisor — against other retirement savings vehicles for your specific goals and risk tolerance; see the Retirement Calculator for a broader retirement-readiness view.
Worked example: a $20,000 initial premium, $300 added monthly, at a 5% annual growth rate for 15 years: account value at the end of accumulation comes to roughly $122,460.76. Total contributed over that period is $20,000 + ($300 × 180 months) = $74,000.00, leaving about $48,460.76 in growth — nearly 40% of the final balance.