Annuity Calculator
Calculate annuity payments, future value and present value for fixed annuities.
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Frequently Asked Questions
What is an annuity?
An annuity is a financial product where you make a lump-sum payment (or series of payments) in exchange for regular disbursements beginning immediately or at some future date. They are commonly used for retirement income. Types: immediate annuity (payments start now), deferred annuity (grows first, pays later), fixed (guaranteed rate), variable (market-linked), and indexed (tied to a market index with downside protection).
Are annuities a good investment?
Annuities provide guaranteed income and longevity protection, but often come with high fees (1-3% annually), surrender charges (5-10 years), low returns vs market investments, and complexity. They make sense for retirees who: have maxed all tax-advantaged accounts, want guaranteed lifetime income beyond Social Security, or are extremely risk-averse. For most investors under 60, low-cost index funds outperform annuities.
How are annuity payments taxed?
For non-qualified annuities (funded with after-tax money), each payment is split between a taxable earnings portion and a tax-free return of principal using the exclusion ratio. For qualified annuities (funded with pre-tax money like in an IRA), the entire payment is taxable as ordinary income. Withdrawals before age 59.5 trigger a 10% early withdrawal penalty on the earnings portion.