Annuities are similar to one-time investments in all respects, except that you invest at regular intervals instead of just a one-time sum of money.

Annuity Calculator

Finding the future value of an annuity

Investment per month:
Interest rate:
# of times compounded each year:
# of years:

Finding the investment per month needed in an
annuity to reach a desired future value

Desired future value:
Interest rate:
# of times compounded each year:
# of years:

Finding the number of years it will take to reach
a desired future value in an annuity

Desired future value:
Investment per month:
Interest rate:
# of times compounded each year:



Your Retirement Spending Needs

Use the present value concept now to give yourself a rough idea of the amount of money you need to have saved at the start of retirement to meet your retirement spending needs. You can do this calculation and planning regardless of your age, and the younger you start, the less money you'll need to save at any interest rate because of the power of interest that compounds over the years you hold your investments.


Start by adding up your anticipated annual expenses, subtract out your anticipated fixed sources of income such as Social Security, determine how long you think you will live, and then calculate the present value of that stream of expenses.


Compare that to what you now have saved, or what you think you'll have saved by your retirement date and you'll have a rough idea of whether you're on track or not for your savings goal. 


An Annuity Investment Example

Assume, for example, that you want to guarantee you'll receive $2,000 each month ($24,000 per year) in retirement on top of your Social Security income. You decide that you want a conservative investment, so you choose to invest money into an annuity that will make payments each month to you for the rest of your life once you retire.


Assume your annuity grows at a rate of 3.5 percent annually. You would need to deposit $400,667 today (present value) in exchange for the security of your $2,000 monthly payment for life. By choosing higher-risk investments, you could earn a higher return on your money, but this deal may sound great to you if you value a low-risk investment and you anticipate you'll live a long life.


Calculating Present Value in Excel

When using a Microsoft Excel spreadsheet you can use a PV formula to do the calculations for you. The formula menu has a PV function with an interface that will ask you for the rate, total number of payments, the amount of payment, future value, and whether payments should be applied at the beginning or end of a period. 




Some annuities are better suited for retirees than others. Before buying an annuity, it's absolutely critical that you shop top-rated insurance
companies and carefully compare the rates, fees and benefits.
There is an epidemic of Americans retiring today without a pension or predictable income stream that they can count on. Now, more than ever,
 retirees are turning to annuities that can act something like a "personal pension" by providing a predictable income stream to help secure their
 retirement income.
You may increase income annually as much as 8% with a lifetime income rider.

These special annuity reports will include quotes, company ratings, 3rd party reviews, and fees associated with each annuity, based on your
financial situation and state of residence.
Annuities today also offer added benefits that provide a guaranteed lifetime stream of income which won't decrease when the market performs
poorly, but which has the potential to grow when the markets perform well.
Annuities may be perfect for some retirees and pre-retirees. Annuities do have their advantages: lifetime income, inflation protection, and
principal protection.

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