What is the annuity calculator?
In short
An annuity is an insurance contract that converts a lump sum into guaranteed income. During accumulation, your premium grows at a fixed or projected rate; during payout, the insurer pays a set amount for a period or for life. Example: a $100,000 premium plus $5,000/year for 10 years at 5% grows to about $244,000, paying roughly $1,017/month for 20 years.
This annuity calculator projects both the accumulation phase (how your premium grows before retirement) and the payout phase (how much monthly income it generates), letting you compare fixed and variable annuity strategies.
How to use this calculator
- 1Choose fixed or variable annuity type.
- 2Enter your initial premium and any ongoing annual contributions.
- 3Set the expected annual return and accumulation period (years until payouts begin).
- 4Enter the payout period and annual payout rate.
- 5Review your projected accumulation balance and monthly income.
The formula
- B
- — Accumulation balance at annuitization
- r
- — Annual return/growth rate
- p
- — Annual payout rate
Worked example
The scenario
$100,000 initial premium, $5,000/year contributions, 5% fixed return, 10-year accumulation, 5% payout rate, 20-year payout period.
The result
Accumulation balance: ~$244,000. Monthly payout: ~$1,017. Total lifetime payout: ~$244,000 over 20 years.
Common use cases
- Planning a guaranteed income stream to supplement Social Security
- Comparing the income potential of fixed vs variable annuities
- Modeling a deferred annuity to start income at a future retirement date
- Evaluating whether an annuity outperforms a bond ladder for retirement income
Limitations & assumptions
- Fixed annuity rates are set by insurance companies and can vary significantly — compare multiple insurers.
- Variable annuity projections use assumed rates; actual returns depend on the underlying investments.
- Surrender charges (typically 7-year declining schedule) for early withdrawal are not modeled.
- Annuity payouts can be structured as life-only, period-certain, or joint-and-survivor — this calculator models period-certain only.
Frequently asked questions
What is an annuity?
What is the difference between a fixed and variable annuity?
What is a deferred vs immediate annuity?
What are annuity surrender charges?
Are annuity payments taxed?
Is an annuity a good investment?
What fees do annuities charge?
Can I lose money in an annuity?
Disclaimer: KalkWise calculators are provided for general informational and educational purposes only and do not constitute financial, investment, tax, or legal advice. Results are estimates based on the figures you enter and the assumptions described above. Actual outcomes will vary. Consult a qualified professional before making financial decisions.