Distinct from this site’s annuity payout calculator, which covers drawing a lump sum down to zero — this covers the growth phase that comes before annuitization or withdrawal.
How it works
The initial premium compounds at the assumed growth rate, the same mechanics as compound interest. Additional annual contributions compound as a growing annuity, shown separately so the effect of ongoing contributions is visible against the premium alone.
What this does not include
Real annuities carry fees (mortality and expense charges, rider costs) that reduce the effective growth rate below the stated assumption — this calculator uses a single net growth rate rather than modeling fees separately.
How to use this calculator
- Enter the initial premium and assumed annual growth rate.
- Enter any additional annual contributions and years until annuitization or withdrawal.
A worked example
A $50,000 initial premium, no additional contributions, 5% growth rate, 15 years: future value = $103,946.41.
The same premium plus $5,000 annual contributions at the same rate and term: future value = $211,839.23 — more than double, since the regular contributions compound alongside the initial premium.
What the variables mean
| Variable | Meaning |
|---|---|
| Premium | Initial lump-sum contribution |
| Annual contribution | Additional yearly contributions during the accumulation phase |
| Growth rate | Assumed annual growth rate |
| Years | Length of the deferral period before payout begins |
Edge cases worth knowing
Adding modest annual contributions can dramatically increase the final value — the second example’s $5,000/year addition more than doubles the ending balance compared to the lump sum alone, since each contribution gets its own years to compound.
A negative growth rate produces an undefined result here — the calculator declines to show one for a shrinking deferred annuity, since a negative-return annuity isn’t a realistic product scenario.
Frequently asked questions
Is growth inside an annuity taxed each year?
No — annuities grow tax-deferred, meaning no tax is owed on the growth until money is withdrawn, similar to a traditional IRA’s tax treatment.
What happens at the end of the accumulation period?
The accumulated value can be annuitized into a stream of payments — this site’s annuity payout calculator computes what payment a given lump sum can sustain.
Does this account for annuity fees?
Not separately — enter a net growth rate that already reflects expected fees for a more realistic projection.
