Annuity Calculator
Grow an annuity through its accumulation phase to a future value.
About Annuity Calculator
During the accumulation phase a deferred annuity works like any tax-deferred investment: premiums compound and you don't owe tax until withdrawal. The expense ratio (mortality & expense charges plus admin fees) is deducted from the credited rate to arrive at your actual net return. The tax-deferral comparison shows how much more you accumulate versus a taxable account where investment income is taxed each year — the advantage grows with time and your tax rate.
Formula
Future value with regular contributions
FV = Initial premium × (1 + net monthly rate)^months + Monthly premium × growth factor
- PV_0
- Initial premium
- PMT
- Monthly premium
- r_net
- Net monthly rate = (credited rate − expense ratio) / 12
- n
- Months in accumulation phase
Worked example
With the default values below, Annuity Calculator returns Annuity Value at End of Accumulation of $284,050. Change any input above and every figure here is recalculated in your browser.
Inputs used
- Initial Premium (Starting Balance)minimum 0 $
- 50,000 $
- Monthly Premiumminimum 0 $
- 500 $
- Credited Interest Rateaccepts 0–15
- 5
- Annual Expense Ratio / M&E Charge (%)accepts 0–5
- 1.25
- Accumulation Period (Years)accepts 1–50
- 20
- Tax-Deferred Comparison
- Yes
- Marginal Income Tax Rate (%)accepts 0–50
- 22
Results
- Annuity Value at End of Accumulation
- $284,050
- Total Premiums Paid
- $170,000
- Growth (Interest Credited)
- $114,050
- Net Return After Expenses
- 3.75%
- Taxable Account Value (Comparison)
- $242,921
- Tax-Deferral BenefitExtra value versus a taxable account at your marginal rate.
- $41,129
Step by step
- 1Net credited rate after expenses= 3.75%/year
- 2Accumulation phase future value= $284,050
- 3Total premiums paid= $170,000
- 4Growth on investment= $114,050
- 5Taxable account at same contribution= $242,921Tax deferral adds $41,129 compared to a taxable account at 22% tax rate.
Assumptions and limits
- The result is derived only from the 7 inputs listed above. Anything not among them is not part of the calculation.
- In particular, this calculator does not take inflation into account.
- Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
- This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.
How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.
Frequently Asked Questions
What is the M&E charge and why does it matter?
Mortality & Expense (M&E) risk charges and administrative fees are deducted annually from variable annuity sub-accounts, typically 1–2%. Because they compound against you over time, a 1.5% drag on a 7% gross return leaves you with only 5.5% — reducing the final balance significantly over 20+ years.
Do fixed annuities have expense charges?
Fixed annuities quote a net credited rate, so there's no separate deduction — the insurer absorbs costs internally. Set the expense ratio to 0% for fixed annuities and enter the guaranteed credited rate directly.
When should I choose an annuity over a regular investment account?
Annuities make most sense after maxing out 401(k) and IRA contributions, when you want tax-deferred growth on after-tax dollars and guaranteed income in retirement. The tax deferral benefit shown here quantifies the advantage. If your time horizon is short, high fees can outweigh the deferral benefit.
What happens after accumulation ends?
Use the Annuity Payout Calculator to model the income phase: the accumulated value is converted into regular payments either for a fixed period or for life.