Deferred Fixed Annuity Calculator
Calculate year-end values, compounded interest, taxes, and post-tax value for your annuity
Investment Summary
Yearly Breakdown
| Year | Beginning Value | Annual Rate | Year-End Value | Yield to Term |
|---|
Tax (15%) = $1,289.06 (on Interest)
Post Tax Value = $107,304.66
Deferred Fixed Annuity Calculator
A Deferred Fixed Annuity Calculator helps you estimate how much your investment will grow over time before you start receiving payments. It considers your initial investment, term length, interest rate, and compounding frequency to show the future value of your annuity — both before and after taxes. This tool is especially useful for individuals planning long-term financial goals such as retirement.
You can explore more saving tools on the Savings Calculators Index page for related options.
What Is a Deferred Fixed Annuity?
A deferred fixed annuity is an investment where you deposit money now and let it grow at a fixed interest rate for a set number of years before withdrawing it. During this accumulation period, interest compounds regularly, meaning you earn interest on both your initial investment and the accumulated earnings.
For example, if you invest $100,000 in a 5-year deferred annuity with a fixed annual rate of 1.65% compounded monthly, your money grows gradually each year until maturity.
If you want to calculate how regular investments can build over time with or without inflation, check the Investment Calculator for comparison.
How the Deferred Fixed Annuity Calculator Works
The calculator uses the future value of compound interest formula to estimate your total accumulation.
Plain Text Formula:
Future Value = Present Value × (1 + r / n)^(n × t)
Where:
- Present Value = Initial investment
- r = Annual interest rate (as a decimal)
- n = Number of compounding periods per year (monthly = 12)
- t = Number of years
This formula accounts for how often your interest compounds — monthly, quarterly, semiannually, or annually. Compounding frequency directly affects your final balance: the more frequent the compounding, the higher the return.
Example Calculation
Let’s break down an example for better understanding.
Investment Details:
- Initial Investment: $100,000
- Term: 5 years
- Annual Interest Rate: 1.65%
- Compounding: Monthly
Results Table:
| Year | Beginning Value ($) | Annual Rate (%) | Year-End Value ($) | Yield to Term (%) |
|---|---|---|---|---|
| 1 | 100,000.00 | 1.65 | 101,662.54 | 1.663 |
| 2 | 101,662.54 | 1.65 | 103,352.71 | 3.353 |
| 3 | 103,352.71 | 1.65 | 105,070.99 | 5.071 |
| 4 | 105,070.99 | 1.65 | 106,817.83 | 6.818 |
| 5 | 106,817.83 | 1.65 | 108,593.71 | 8.594 |
Tax (15%) on Interest: 1,289.06
Post-Tax Value: $107,304.66
This means your $100,000 investment would grow to $108,593.71 before taxes and $107,304.66 after taxes, assuming the specified tax rate applies at withdrawal.
Understanding Taxes on Deferred Annuities
If your investment is pretax, taxes are deferred until you begin withdrawals. The calculator adjusts for this by applying your chosen tax bracket at the end of the term.
If your investment is after-tax, you’ve already paid income taxes on the principal, so only the interest earned is taxed.
To see how inflation impacts your post-tax growth, try the Investment Inflation Calculator.
Key Benefits of a Deferred Fixed Annuity
- Guaranteed Growth: Your interest rate is fixed for the term, providing stable and predictable returns.
- Tax Deferral: Earnings compound tax-free until withdrawal.
- Low Risk: Unlike market-linked products, your return is not affected by stock market fluctuations.
This makes deferred annuities suitable for conservative investors aiming for steady long-term growth without volatility.
Plain Text Tax Calculation Formula
Tax Amount = (Future Value – Present Value) × (Tax Rate / 100)
Post-Tax Value = Future Value – Tax Amount
This simple equation helps estimate the amount of tax you’ll owe on your interest earnings at the end of the annuity term.
When to Use a Deferred Fixed Annuity
- You want guaranteed returns for a specific period.
- You are saving for retirement and want to delay taxes.
- You prefer a low-risk investment option compared to market-based assets.
If your goal is retirement savings growth, the Retirement Savings Calculator can help compare how deferred annuities fit into your long-term plan.
A Deferred Fixed Annuity Calculator simplifies complex investment projections by providing clear insight into how your money will grow, how taxes will affect it, and how compounding benefits you over time.
It’s a powerful tool for anyone seeking secure, predictable income in the future, helping you plan your retirement or savings with precision and confidence.