Future Value of Annuity

(A guide on discovering the future value of your annuity)

Written by Christina Palermo
Written by Christina Palermo

Christina is a freelance writer and licensed insurance agent. She has worked in many facets of the insurance industry, from entry-level assistant to account manager/sales rep to vice president of operations.

Future value of annuity

After customizing your annuity and making your first deposit, you may want to define the future value of the annuity. In other words, you may wonder how much cash you’ll receive in the future based on the rate of return (aka discount rate). 

There are calculations you can do now to figure out how much your annuity account will pay you later. Or, in other words, complete a few formulas to guesstimate the amount of cash you’ll receive someday. 

Our independent agent matching tool will find you the best insurance solution in your area. Tell us what you're looking for and we'll recommend the best agents for you. Any information you provide will only be sent to the agent you pick.

Remind Me: What’s an Annuity? 

An annuity is a financial product that will pay you a sum of money each year or at other regular intervals. Usually, people invest in an annuity so they’ll have a steady flow of income during their future retirement years. 

Annuity accounts grow without being taxed and annuity funds can be taken out without a penalty after age 59.5 years. As you may recall, the disbursements you’ll get later will be taxed as ordinary income. 

What Can Change the Future Value of Annuity? 

Many features of an annuity can be customized or tailored to your particular needs. Whichever combination of annuity options you pick will have a direct impact on the annuity’s future value. 

In case you forgot, below are some of the annuity choices you made when setting up your account. 

  • Do you want a lump sum payment or a series of payments? 
  • When do you want to start receiving your payments (aka annuitize)?
  • Do you want an immediate annuity that pays out right away? 
  • Or do you want a deferred annuity that will send you cash at a predetermined future date? 
  • Will you want your disbursements for a set amount of time (e.g., 20 years)? Or do you want to get smaller payments over your entire lifetime? 
  • Did you select a fixed, variable, or indexed annuity? 
  • Do you have an ordinary annuity? Or is it an annuity due? 

Remember, an annuity is one payment per year. Now if your payments are done when the period finishes, the annuity is known as an ordinary annuity. If the payments are instead done at the beginning of a period then you have annuity due

Examples of Ordinary Annuity

Ordinary annuity payments can be at the finish of a month, quarter, semi-annual, or annual time frame. If you have an annuity that sends you payments quarterly, then you’ll receive a first quarter (January, February, March) payment at the close of March. 

Examples of Annuity Due

To make this easier to understand, let’s think about annuity due as the bills usually due at the beginning of the month (or the designated period). Usually, rent, mortgage, car payments, and insurance are due on the first of the month. The fact that a renter or car owner makes payment on December 1 before enjoying the use of their apartment or vehicle during the rest of the month is what makes it annuity due. 


Get Annuities from the Experts

Our independent agents shop around to find you the best coverage.

What’s My Annuity Going to Be Worth Someday? 

Today might be the day you want to figure out the future value of your annuity. By doing so you’ll have a better idea of how much your deposits will be valued at years later. You’ll need to calculate the future value with the annuity’s interest rate. It’s probably easiest to use the current interest you are receiving for investments in your future value tabulations. 

You’ll also have to take into consideration whether you have an ordinary annuity or an annuity due. Again, these are important details that make a difference in how you calculate your annuity’s future worth. 

Future Value of an Ordinary Annuity Formula

You could simply plug in the below future value of an ordinary annuity formula into a spreadsheet. This would help you quickly figure out what your retirement payments might be someday.  


P = Future annuity payments
PMT = Amount of each annuity payment
r = Interest rate
n = Total number of periods during which payments are made

An alternative to the above formula is to use a special ordinary annuity table. The one below is a good example of an annuity table you can use as a quick reference. Keep in mind, this is only an example and may not exactly match real-life scenarios. 

Future Value of Ordinary Annuity Table 

Let’s imagine Lisa expects to make 6 deposits of $10,000 into an annuity investment account. Lisa’s annuity has a 5% interest rate. Lisa will go to her ordinary annuity table, put her finger on the “n” column and move down to the number “6” representing Lisa’s 6 annuity payments. 

Then Lisa will follow the “6” row over to intersect the 5% column which has the 6.8019 factor noted. And last, Lisa would multiply the 6.8019 by $10,000 to get the future amount of $68,019. 

Future Value of an Ordinary Annuity of 1 Table

n 1% 2% 3% 4% 5% 6%
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 2.0100 2.0200 2.0300 2.0400 2.0500 2.0600
3 3.0301 3.0604 3.0909 3.1216 3.1525 3.1836
4 4.0604 4.1216 4.1836 4.2465 4.3101 4.3746
5 5.1010 5.2040 5.3091 5.4163 5.5256 5.6371
6 6.1520 6.3081 6.4684 6.6330 6.8019 6.9753
7 7.2135 7.4343 7.6625 7.8983 8.1420 8.3938
8 8.2857 8.5830 8.8923 9.2142 9.5491 9.8975
9 9.3685 9.7546 10.1591 10.5828 11.0266 11.4913
10 10.4622 10.9497 11.4639 12.0061 12.5779 13.1808
11 11.5668 12.1687 12.8078 13.4864 14.2068 14.9716
12 12.6825 13.4121 14.1920 15.0258 15.9171 16.8699
13 13.8093 14.6803 15.6178 16.6268 17.7130 18.8821
14 14.9474 15.9739 17.0863 18.2919 19.5986 21.0151
15 16.0969 17.2934 18.5989 20.0236 21.5786 23.2760

Get Annuities from the Experts

Our independent agents shop around to find you the best coverage.

Future Value of Annuity Due Table 

Let’s go over an example of annuity due calculations. If Harvey plans on making 9 deposits of $10,000 into an annuity fund at the beginning of each quarter, then he has the annuity due type. Harvey’s annuity account has a 6% interest rate (which is a 12.1808 factor on our annuity due table below). Harvey would multiply 12.1808 by $10,000 to get the annuity’s future worth of $121,808. 

Future Value of Annuity Due of 1 Table

n 1% 2% 3% 4% 5% 6%
1 1.0100 1.0200 1.0300 1.0400 1.0500 1.0600
2 2.0301 2.0604 2.0909 2.1216 2.1525  2.1836
3 3.0604 3.1216 3.1836 3.2465 3.3101 3.3746
4 4.1010 4.2040 4.3091 4.4163 4.5256 4.6371
5 5.1520 5.3081 5.4684 5.6330  5.8019 5.9753
6 6.2135 6.4343 6.6625 6.8983 7.1420 7.3938
7 7.2857 7.5830 7.8923 8.2142 8.5491 8.8975
8 8.3685 8.7546 9.1591 9.5828  10.0266 10.4913
9 9.4622 9.9497 10.4639 11.0061 11.5779 12.1808
10 10.5668 11.1687 11.8078 12.4864 13.2068 13.9716
11 11.6825 12.4121 13.1920 14.0258 14.9171 15.8699
12 12.8093 13.6803 14.6178 15.6268 16.7130 17.8821
13 13.9474 14.9739 16.0863 17.2919 18.5986 20.0151
14 15.0969 16.2934 17.5989 19.0236 20.5786 22.2760
15 16.2579 17.6393 19.1569 20.8245  22.6575 24.6725

Is Future Value of Annuity in Your Future? 

It’s okay if you are a little put off by all the annuity terms and rules. The one thing to remember is that money saved in an annuity now can be a steady stream of retirement income later. Once you do set up an annuity, you may be curious about its future worth. 

With plenty of future value formulas, calculations, and tables, you’ll be ready to count your future cash today. 

Use our independent agent matching system to find the best insurance plan in your area. You tell us what you’re looking for, and our technology will recommend the best agents for your needs. Any information you give us will only be sent to the agents you pick 

Share this page on Twitter Share this page on Facebook Share this page on LinkedIn