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Fixed Annuity Calculator

The deferred annuity calculator below has many potential uses. By using the inputs in a particular way, you can determine the growth prospects for a fixed annuity, or gain an understanding of how today’s low interest rates can impact a contract of long periods. The output can also give you an idea of what type of income might be expected in the future from a hypothetical fixed annuity. You can also use it for variable, indexed, and immediate annuities.

How an investment might grow?
Starting Principal ($)How much do you plan to invest? Click here to learn more.
Annual Growth Rate (%)On average, what annual return do you expect? Click here to learn more.
Annual Fee and Expense rate (%)What is the expected annual rate of management fees and other expense? Click here to learn more.
Growth Period / Years until retirementHow long can you grow your principal before taking withdrawals? Click here to learn more.
Withdrawal Period / Years of retirement income neededHow many years of withdrawals do you expect to make? Click here to learn more.
Annual growth rate during withdrawal period (%)What interest rate do you expect to earn while taking withdrawals? Click here to learn more.

Based on the inputs above, the approximate returns and expenses accumulated during the deferred growth period would be:

Growth Period
Gross Total Gains ($)How much would the principal grow without fees?  
Total Expense Paid (During Accumulation)How much fee expense is paid during the growth period?  
Annual Net Return (%)What is the equivalent APY during growth?  
Total Net Gains ($)How much profit would accumulate after fees are paid?  
Ending ValueWhat is the ending value of your principal (plus growth, minus fees)?  

Starting with the estimated ending value from the growth period, the estimated income available over the stated retirement period and the approximate overall return from the initial investment until the end of the withdrawal period would be:

Withdrawal Period
Starting ValueWhat is the principal balance when starting withdrawals?  
Estimated Annual Income*If withdrawing to $0 balance, what is the annual withdrawal amount?  
Total WithdrawalsWhat is the sum of the total of those annual income payments?  
Final Ending Value     
Total Net Return


What did the initial principal earn from principal start to withdrawal end?
Annual Net Return


What is the average annual net return? This is the observed compound growth rate from principal start to withdrawal end.

*The Estimated Annual Income calculation is based on a standard annuity payment formula used to calculate the periodic payment on an annuity.   For further explanation of the formula please refer to


A Hypothetical example:

By walking through a hypothetical example, you will be able to estimate the amount of growth on your fixed deferred annuity, as well as how that figure is derived.

The first step involves calculating the overall growth on the fixed deferred annuity. We will use $100,000 as the “Starting Principal” or purchase amount. A 50 year old investor might expect to need income starting at age 70, so we enter 20 years for the “Growth Period”. Once they have reached 70, the investor might plan to need income for another 20 years or so (until age 90), so we also enter 20 years as the “Withdrawal Period”.

In the “Annual Growth Rate” input, we enter an interest rate assumption. For this illustration we will use 2% per year as the interest rate for our hypothetical annuity. We can also factor in a projected future interest rate, or the interest rate expected at the end of our growth period (at age 70). For this example, we will use a projected interest rate of 4% as the “Annual growth rate during withdrawal period”.

Since fixed annuities typically do not carry any explicit charges, we enter 0% as the “Annual Fee and Expense rate”.

Once you have clicked on the Calculate button, the following information will appear showing the total amount of growth that the annuity achieved over the 20 year time frame using the 2% guaranteed interest rate.

Here, you will notice not only the amount of gross total gains on the annuity over time, but also that there have been no explicit fees.

Taking the amount of the annuity's net “Ending Value”, you can estimate the amount of income you might receive from the annuity during the annuity's payout phase.

The annuity income amount will depend on interest rates at the time of annuitization and the payout options that you choose, such as the frequency (monthly or annual payments) and the duration (life, joint life, term). For example, if you were to choose the Life Only income option, the annuity would generate an income for the remainder of your life - regardless of how long that may be.

In this example, we selected a 20 year income period and 4% interest. Given these assumptions, the $148,595 “Ending Value” from the “Growth Period” would provide an “Estimated Annual Income” of $10,394 for 20 years, or a total of $218,677 in income (“Total Withdrawals”).

Receiving $218,677 from the original $100,000 investment may sound good, but for an investor that needs more growth before retirement in order to sustain their quality of life there may be better options. In fact, the return over the full 40 years in this illustration is only 2% per year, less than long term average inflation of around 3%. So the $218,677 of income could actually have LESS purchasing power than $100,000 does today!

It is important to note annuities can be highly complex financial vehicles with many moving parts, so it is essential to understand how these products work and where they could fit into your overall financial plan. With this in mind, before you purchase an annuity you should ensure it’s the right product for you.


We know this can be confusing and have helped hundreds of annuity owners understand their contracts. For help, contact one of our investment professionals from the Contact Us page.

1 Source: Global Financial Data, Inc. as of 2/5/2013. The Consumer Price Index (CPI) averaged 2.97% over the period 12/31/1925 –12/31/2012.

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