How will my annuity grow?
Enter your premium, any yearly additions, the rate, and how many years. See what your annuity is worth, what you keep after tax, and what tax deferral adds.
- Your annuity will be worth
- $162,889.46
At 5% a year, an annuity with $100,000.00 put in grows to $162,889.46 in 10 years, or $147,795.99 after tax if you take it all out.
- Money put in
- $100,000.00
- Interest earned
- $62,889.46
- After tax, if you take it all out
- $147,795.99
- Same money in a taxable account
- $145,202.31
- Gain from tax deferral
- $2,593.68
- Years
- 10
Your annuity will be worth: $162,889.46. At 5% a year, an annuity with $100,000.00 put in grows to $162,889.46 in 10 years, or $147,795.99 after tax if you take it all out.
How much of it is interest?
Annuity or taxable account?
What does each year look like?
The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use
How to calculate
Computes the value of a fixed deferred annuity from a premium, yearly additions, and a fixed rate, its value after tax, and the same money in a taxable account.
Example with the default inputs (Starting premium $100,000.00, Added each year $0.00, Yearly interest rate 5%, For how long? (years) 10, Your tax rate 24%): At 5% a year, an annuity with $100,000.00 put in grows to $162,889.46 in 10 years, or $147,795.99 after tax if you take it all out.
Method: Each year, value = (value + addition) × (1 + r); after tax = value − tax × (value − money put in); a taxable account grows by (1 + r × (1 − tax)) each year.
- The rate stays the same every year, as in a fixed or multi-year guaranteed annuity.
- Additions are made at the start of each year, including the first.
- Interest is credited once a year at the yearly rate.
- Surrender charges, fees, and riders are not included. Taking money out early can cost surrender charges.
- “After tax” taxes all the interest at one rate, as if you took it all out at once, and leaves out the 10% additional tax before age 59½.
- This is an estimate for planning, not financial advice.
Worked examples
Each example is checked against the calculator on every build.
- Starting premium $100,000.00, Yearly interest rate 5%, For how long? (years) 10, Your tax rate 24% gives Your annuity will be worth $162,889.46, Interest earned $62,889.46, After tax, if you take it all out $147,795.99, Same money in a taxable account $145,202.31, Gain from tax deferral $2,593.68.Source: hand calculation in content.mdx: 100,000 × 1.05^10; 100,000 × 1.038^10
- Starting premium $10,000.00, Added each year $5,000.00, Yearly interest rate 4%, For how long? (years) 3, Your tax rate 0% gives Your annuity will be worth $27,480.96, Money put in $25,000.00, Gain from tax deferral $0.00.Source: hand calculation in content.mdx: 15,000 × 1.04³ + 5,000 × (1.04² + 1.04)
- Starting premium $50,000.00, Yearly interest rate 0%, For how long? (years) 5, Your tax rate 30% gives Your annuity will be worth $50,000.00, Interest earned $0.00, After tax, if you take it all out $50,000.00.Source: hand calculation in content.mdx: no interest at 0%
How the value is worked out
The calculator runs year by year. With the yearly rate r and your tax rate t (as decimals):
- The yearly addition goes in at the start of the year (an empty addition counts as $0).
- Interest = (value + addition) × r is credited, so value = (value + addition) × (1 + r).
- A taxable account with the same money grows the same way, but its interest is taxed every year: taxable = (taxable + addition) × (1 + r × (1 − t)). It starts with the premium.
The results:
- Your annuity will be worth is the value after the last year.
- Money put in is the premium plus every addition. Interest earned is the value minus the money put in.
- After tax, if you take it all out = value − t × interest earned.
- Same money in a taxable account is the taxable balance after the last year. Gain from tax deferral = after tax − taxable account.
Assumptions
- The rate stays the same every year and is credited once a year.
- Surrender charges, fees, riders, and the 10% additional tax before age 59½ are not included.
- This is an estimate for planning, not financial advice.
Worked examples by hand
$100,000 at 5% for 10 years, 24% tax. Value = 100,000 × 1.05^10 = 100,000 × 1.628895 = $162,889.46, so the interest is $62,889.46. After tax: 162,889.46 − 0.24 × 62,889.46 = $147,795.99. In a taxable account the money grows by 1 + 0.05 × 0.76 = 1.038 a year: 100,000 × 1.038^10 = 100,000 × 1.452023 = $145,202.31. Tax deferral adds $2,593.68.
$10,000 plus $5,000 at the start of each year, 4%, 3 years. In year 1, $15,000 goes in and grows 3 years; the next two additions grow 2 years and 1 year: 15,000 × 1.124864 + 5,000 × (1.0816 + 1.04) = 16,872.96 + 10,608.00 = $27,480.96, from $25,000 put in. With 0% tax the taxable account is the same, so tax deferral adds nothing.
$50,000 at 0% for 5 years. No interest: the value is $50,000, and so is the value after tax.
Other questions people ask
What is a fixed deferred annuity?
It is a contract with an insurance company. You pay a premium (once, or over time), and during the accumulation phase the insurer credits interest. A fixed annuity guarantees at least a minimum rate; a multi-year guaranteed annuity (MYGA) locks a rate for a set number of years. Later you can take the money out or turn it into income payments.
How is the annuity value calculated?
Each year, the value plus any addition earns the yearly rate: value = (value + addition) × (1 + r). With no additions this is premium × (1 + r)^years. $100,000 at 5% for 10 years grows to $162,889.46.
What does tax deferral add?
In an annuity, earnings are not taxed until they come out. In a taxable account, interest is taxed every year, so less of it compounds. The calculator taxes the annuity’s interest once at the end and the taxable account’s interest every year, at the same rate, and shows the difference.
What if I need the money early?
Most annuities charge a surrender charge if you take out more than a set amount during the first years. Withdrawals of earnings are taxed as income, and before age 59½ they may also carry a 10% additional tax. The calculator does not include surrender charges or that 10%.
Is the money in an annuity guaranteed?
A fixed annuity’s rate is set by the insurer and guaranteed in the contract, but the guarantee is only as strong as the insurer: the SEC’s investor site notes the insurer’s obligations depend on its financial strength and claims-paying ability. Variable and indexed annuities work differently and can lose value or cap your gains.
How do I turn the value into income?
Use the annuity payout calculator to see the level payout the value could pay for a number of years. A lifetime payout from an insurer is priced differently, with life expectancy and the insurer’s rates, so ask for a quote.