Deferred Fixed Annuity Calculator

Instructions:

• Enter the required financial information including Principal Amount, Annual Interest Rate, Number of Years, Compounding Frequency, Regular Contributions (optional), and Currency Symbol.
• Click the "Calculate" button to perform the calculation and view the results.
• The results will include the Future Value and Total Interest Earned.
• The "Calculation Details" section provides information about the formula used for calculation.
• Your calculation history is displayed in the "Calculation History" section.
• Use the "Clear Entries" button to reset the entries and start a new calculation.
• Enjoy using the tool!

Principal Amount:

Annual Interest Rate (%):

Number of Years:

Compounding Frequency: Annually Semi-Annually Quarterly

Regular Contributions (optional):

Currency Symbol:

Calculate

Results:

Future Value:

Total Interest Earned:

Calculation Details:

Formula Used:

Future Value = Principal × (1 + Rate / Compounding Frequency)^(Years × Compounding Frequency) + Contributions × ((1 + Rate / Compounding Frequency)^(Years × Compounding Frequency) - 1) / (Rate / Compounding Frequency)

Explanation:

The Future Value is calculated using the formula for compound interest. The principal amount is multiplied by the compounding factor, and regular contributions are added to the result. The total interest earned is the difference between the future value and the initial principal amount.

Calculation History:

A deferred fixed annuity is a contract between you and an insurance company. You pay a lump sum of money to the insurance company, and in return, the insurance company guarantees to pay you a fixed interest rate on your investment for a specific period. The interest rate is fixed for the duration of the contract, and the insurance company guarantees to pay you a specific amount of money at the end of the contract.

Formulae

The formula for calculating the value of a deferred fixed annuity is:

A = P * (1 + r/n)^(n*t)

Where:

• A = the value of the annuity at the end of the contract
• P = the principal amount invested
• r = the annual interest rate
• n = the number of times the interest is compounded per year
• t = the number of years the annuity is held

Benefits

Deferred fixed annuities offer several benefits, including:

• Guaranteed income: Deferred fixed annuities provide a guaranteed income stream at a later date, which can help you plan for retirement.
• Tax-deferred growth: The earnings on your investment are tax-deferred until you withdraw them, which can help you save money on taxes.
• Fixed interest rate: The interest rate on your investment is fixed for the duration of the contract, which can provide stability and predictability.
• No contribution limits: There are no contribution limits on deferred fixed annuities, which means you can invest as much as you want.
• Death benefit: Deferred fixed annuities provide a death benefit to your beneficiaries if you pass away before the end of the contract.

Interesting Facts

• Deferred fixed annuities are used as a retirement planning tool because they provide a guaranteed income stream at a later date.
• Deferred fixed annuities are different from immediate annuities, which start paying you right away.
• Deferred fixed annuities come in different types, including fixed, variable, and indexed.
• The interest rate on a deferred fixed annuity is higher than the interest rate on a savings account or CD.
• Deferred fixed annuities are not FDIC-insured, which means they are not backed by the government.

References

Here are some scholarly references that you may find useful:

• ¹Deferred Annuity – Meaning, Types, Benefits & How it Works? – Policybazaar
• ³How a Fixed Deferred Annuity Works – SmartAsset
• ⁴What Is a Deferred Annuity and How Does It Work? – The Balance
• ⁵Deferred Annuity Formula | Calculator (Example with Excel … – EDUCBA

Last Updated : 25 November, 2023