The future value of an annuity formula is used to calculate what the value at a future date would be for a series of periodic payments into your annuity. To use the future value of annuity calculator, enter in the details below. This calculator is also referred to as a future value of lump sum calculator or retirement annuity calculator.
On This Page:
- what is an annuity
- future value annuity formula
- future value annuity definition
- retirement annuity calculator
- retirement annuity options
- retirement annuity pros and cons
What Is An Annuity
An annuity is an insurance product that pays out income. Annuities are typically part of a retirement strategy. Annuities are typically funded with a lump-sum payment or via a series of payments over a period of time. The main goal of an annuity is to provide a steady stream of income over time.
What is the Future Value of Annuity Formula
The formula used in this future value of annuity calculator is as follows
fV = The future value of the annuity
P = the periodic payment into the annuity
r = rate per period
n = number of periods
fV = P[ ((1+r)n - 1)/r]
What is the Definition for Future Value Annuity
The value of a group of payments at a specified date in the future. These payments are known as an annuity, or set of cash flows. The future value of an annuity measures how much you would have in the future given a specified rate of return or discount rate.
Retirement Annuity Calculator
A retirement annuity calculator is actually the exact same calculation as the basic annuity calculator above.
Retirement Annuity Options
The investment options with your retirement annuity vary widely depending on the type of annuity you have setup. If you have chosen a fixed-rate annuity you won’t be responsible for choosing the investments since the insurance company will handle that and will pay you a fixed return.
However, if you have chosen a variable annuity, you actually get to decide how to invest your money and the value of your account will be determined by the funds that YOU choose.
Retirement Annuity Pros And Cons
Pros of an Annuity
- Highest guaranteed payout
- Annuities typically do not have annual fees
- Money grows tax deferred
Cons of an Annuity
- Lack of liquidity – you must continue receiving the payments
- No Growth Component
- Lock-in current interest rates