Annuity Calculator & Lifetime Income Simulator
Model immediate and deferred income annuities, estimate lifetime payouts under different guarantee options, see how a surrender schedule works — and calculate the future and present value of any series of regular payments.
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Capital Composition Waterfall
Breakdown of total expected payouts.
Surrender Charge Schedule
Typical 7-year declining—
Multi-Decade Actuarial Ledger & Cashflow Schedule
Accumulation growth, COLA step-ups and income drawdowns. The notional account shows what the money alone would cover — payouts continue for life after it runs out.
| Contract Yr | Annuitant Age | Phase | Beginning Balance | Annual Payout | Cumulative Cash Out | Notional Account (End) |
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Annuity Future Value & Present Value
Ordinary annuity · monthlyCalculate the future value and present value of a series of regular payments, using standard annuity formulas.
FV = PMT × [(1+i)^n − 1] / i · PV = PMT × [1 − (1+i)^−n] / i — with i = annual rate ÷ 12 and n = years × 12.
The Mechanics of Mortality Credits & Longevity Risk Pooling
A lifetime annuity pools longevity risk. Money left behind by annuitants who die earlier than average helps fund payments to those who live longer — the "mortality credit". That is why a life annuity can pay more each year than you could safely withdraw from the same savings on your own, where you'd have to plan for living to 95 or beyond.
The trade-off: with a life-only contract, if you die early the remaining value stays in the pool. Guarantee periods and joint options reduce the payout in exchange for protecting heirs or a spouse.
Qualified vs. Non-Qualified Annuity Taxation
Tax treatment depends on how the annuity was funded. Qualified annuities bought with pre-tax IRA or 401(k) money are generally taxed as ordinary income when paid out, and are subject to Required Minimum Distribution rules (RMDs start at 73, or 75 for people born in 1960 or later).
Non-qualified annuities bought with after-tax savings use an exclusion ratio (IRC § 72): part of each payment is a tax-free return of your premium and part is taxable earnings, until your cost basis has been recovered.
Future value vs. present value
Future value tells you what a series of regular payments will grow to by the end of the term, accounting for compound interest along the way — useful for projecting retirement contributions or systematic savings plans.
Present value tells you the equivalent lump sum today that would be worth the same as that entire stream of future payments — useful for comparing an annuity payout against a one-time settlement offer, or valuing a pension stream.
By Suhaib Hassan · Formula verified 27 Sep 2026 · How CalculatePilot verifies formulas →
This calculator models an ordinary annuity
The future and present value section assumes an 'ordinary annuity,' where payments occur at the end of each period (the most common structure for loans and many savings plans) rather than an 'annuity due,' where payments occur at the beginning of each period. The distinction produces a small but real difference in the result, so check which structure applies to your specific situation.
It also assumes monthly compounding matching monthly payments — for annual or quarterly payment schedules, the underlying math is the same but would need the compounding frequency adjusted to match.
How the lifetime income estimate works
During deferral the premium grows at your assumed rate. At the payout age, the balance is converted to a monthly income by dividing it by an annuity factor: the present value, at the insurer pricing rate, of $1 a month paid for as long as the chosen option pays — weighted by the chance the annuitant (or either spouse) is still alive, with guaranteed months counted in full and COLA step-ups included. It's an estimate for comparing options, not an insurer quote.
Frequently asked questions
What's the difference between an ordinary annuity and an annuity due?
In an ordinary annuity, payments happen at the end of each period; in an annuity due, they happen at the beginning. This calculator models an ordinary annuity, which is the more common structure for loans and standard savings plans.
When would I use present value instead of future value?
Present value is useful when comparing a stream of future payments (like a pension or settlement) against an equivalent lump sum offered today — it tells you what that future income stream is actually worth in today's dollars.
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