# Variable Annuity Calculator

URL: https://speedycalculator.com/calculators/finance/variable-annuity/
Last updated: 2026-10-25

> The variable annuity calculator projects the value of a variable annuity from a starting balance and regular contributions at an assumed fund return, after the annuity's fees (mortality and expense, administrative, fund and rider charges) – and the value after tax on gains at withdrawal, compared with a low-cost alternative.

## Inputs

- Starting balance
- Yearly contribution
- Years until withdrawal
- Assumed gross return (%)
- Mortality and expense (M&E) fee (%)
- Administrative fee (%)
- Fund expense ratio (%)
- Rider fees (%)
- Income tax rate at withdrawal (%)
- Fees of a low-cost alternative (%)

## Results

- Total annual fees
- Net annual return
- Value before tax
- Total contributions
- Value after tax on gains
- Value with low-cost alternative fees (before tax)
- Cost of the annuity fees

## Formula

```
Net return = gross return − total annual fees
Value = B(1 + net)^n + contribution × ((1 + net)^n − 1) ÷ net
After-tax value = value − (value − contributions) × tax rate
```

## Explanation

Variable annuities grow tax-deferred, but fees often total 2–3% a year, which can consume a large share of the growth over decades. Compare with maxing out 401(k)s and IRAs first.

### How to use the Variable Annuity Calculator

- **Starting balance**
- **Yearly contribution**
- **Years until withdrawal**
- **Assumed gross return**
- **Mortality and expense (M&E) fee**
- **Administrative fee**
- **Fund expense ratio**
- **Rider fees**
- **Income tax rate at withdrawal**
- **Fees of a low-cost alternative**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter the starting balance, yearly contribution, years until withdrawal, the assumed gross return, each fee and your tax rate at withdrawal.

### 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

FieldWhat to enterStarting balanceAmount in your currencyYearly contributionAmount in your currencyYears until withdrawalA numberAssumed gross returnIn %Mortality and expense (M&E) feeIn %Administrative feeIn %Fund expense ratioIn %Rider feesIn %Income tax rate at withdrawalIn %Fees of a low-cost alternativeIn %

### What each result means

- **Total annual fees** = [Mortality and expense (M&E) fee] + [Administrative fee] + [Fund expense ratio] + [Rider fees]
- **Net annual return** = [Assumed gross return] - [Total annual fees]
- **Value before tax** = fvc([Net annual return]÷100, [Years until withdrawal], [Starting balance], [Yearly contribution])
- **Total contributions** = [Starting balance] + [Yearly contribution]×[Years until withdrawal]
- **Value after tax on gains** = [Value before tax] - max([Value before tax] - [Total contributions], 0)×[Income tax rate at withdrawal]÷100
- **Value with low-cost alternative fees (before tax)** = fvc(([Assumed gross return] - [Fees of a low-cost alternative])÷100, [Years until withdrawal], [Starting balance], [Yearly contribution])
- **Cost of the annuity fees** = [Value with low-cost alternative fees (before tax)] - [Value before tax]

### Example values

How the main result changes when **Starting balance** changes and everything else stays at the example values above:

Starting balanceValue before tax50,000271,586.1475,000330,171.5100,000388,756.86125,000447,342.21150,000505,927.57200,000623,098.28

## Worked example

Inputs — Starting balance: $100,000; Yearly contribution: $5,000; Years until withdrawal: 20; Assumed gross return: 7 %; Mortality and expense (M&E) fee: 1.25 %; Administrative fee: 0.15 %; Fund expense ratio: 0.75 %; Rider fees: 0.5 %; Income tax rate at withdrawal: 22 %; Fees of a low-cost alternative: 0.1 %.

Results — Total annual fees = 2.65 %; Net annual return = 4.35 %; **Value before tax = $388,756.86**; Total contributions = $200,000.00; Value after tax on gains = $347,230.35; Value with low-cost alternative fees (before tax) = $582,552.33; Cost of the annuity fees = $193,795.47.

## FAQ

**What fees do variable annuities charge?**
M&E, administrative, fund expenses and optional riders – often 2–3% a year in total.

**Are variable annuities a good investment?**
They can suit people who have maxed out other tax-advantaged accounts and want guarantees.

**How are withdrawals taxed?**
Gains are taxed as ordinary income; before 59½ a 10% penalty may apply.

**What formula does the Variable Annuity Calculator use?**
Net return = gross return − total annual fees.


## Sources

- [SEC – Variable annuities](https://www.investor.gov/introduction-investing/investing-basics/investment-products/insurance-products/variable-annuities)