A deferred annuity grows tax-deferred until you start withdrawals. Fees and surrender charges vary widely; compare the net return with alternatives like an IRA or 401(k).
How to use the Deferred Annuity Calculator
- Initial lump sum
- Monthly contribution
- Annual return during accumulation
- Years deferred
- Withdrawal period
- Annual return during payout
- Withdrawal frequency
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter the lump sum, monthly contribution, return during accumulation, years deferred, the withdrawal period and the return during payout.
Tips
- Start early – time does more of the work than the amount you save.
- Take the full employer match if your plan offers one.
- Plan with a cautious return (4–6% after inflation) and check again every year.
- Know the contribution limits and required minimum distribution rules for your accounts.
Common mistakes to avoid
- Ignoring inflation when setting a retirement target.
- Underestimating how long retirement can last.
- Withdrawing early and paying penalties and taxes.
Inputs explained
| Field | What to enter |
|---|---|
| Initial lump sum | Amount in your currency |
| Monthly contribution | Amount in your currency |
| Annual return during accumulation | In % |
| Years deferred | A number |
| Withdrawal period | In years |
| Annual return during payout | In % |
| Withdrawal frequency | Choose one: Monthly, Semi-monthly, Bi-weekly, Weekly … |
What each result means
- Balance at the first withdrawal = fvc([Annual return during accumulation]÷1200, [Years deferred]×12, [Initial lump sum], [Monthly contribution])
- Total contributions = [Initial lump sum] + [Monthly contribution]×[Years deferred]×12
- Growth during accumulation = [Balance at the first withdrawal] – [Total contributions]
- Withdrawal per period = pmt(perr([Annual return during payout]÷100, 12, [Withdrawal frequency]), [Withdrawal period]×[Withdrawal frequency], [Balance at the first withdrawal])
- Total withdrawals = [Withdrawal per period]×[Withdrawal period]×[Withdrawal frequency]
- Interest earned during payout = [Total withdrawals] – [Balance at the first withdrawal]
Example values
How the main result changes when Initial lump sum changes and everything else stays at the example values above:
| Initial lump sum | Withdrawal per period |
|---|---|
| 25,000 | 900.47 |
| 37,500 | 1,086.37 |
| 50,000 | 1,272.26 |
| 62,500 | 1,458.15 |
| 75,000 | 1,644.04 |
| 100,000 | 2,015.82 |
Formula
Balance at start of payout = lump sum × (1 + i)^n + contribution × ((1 + i)^n − 1) ÷ iWithdrawal = pmt(payout rate per period, payout periods, balance)Worked example
Inputs — Initial lump sum: $50,000; Monthly contribution: $300; Annual return during accumulation: 6 %; Years deferred: 15; Withdrawal period: 20 years; Annual return during payout: 4 %; Withdrawal frequency: Monthly.
Results — Balance at the first withdrawal = $209,950.29; Total contributions = $104,000.00; Growth during accumulation = $105,950.29; Withdrawal per period = $1,272.26; Total withdrawals = $305,341.79; Interest earned during payout = $95,391.50.
Frequently asked questions
What is a deferred annuity?
An annuity where payouts begin at a future date.
Is a deferred annuity tax-deferred?
Yes – gains are taxed when withdrawn.
What are surrender charges?
Fees for withdrawing early, often 5–7% declining over several years.
What formula does the Deferred Annuity Calculator use?
Balance at start of payout = lump sum × (1 + i)^n + contribution × ((1 + i)^n − 1) ÷ i.