# The Future Value of an Annuity: How to Calculate and Plan for It

Shawn Plummer

CEO, The Annuity Expert

An annuity is a contract between you and an insurance company in which the company agrees to make periodic payments to you, usually over a period of time. The future value of an annuity (FVA) is the amount that the payments will be worth when they are received. In this guide, we will discuss how to calculate the FVA and some tips on how to plan for it.

## What Is the Future Value of an Annuity?

The future value of an annuity (FVA) is the amount that the payments will be worth when they are received. The FVA can be calculated using several different methods, but the most common method is to use a present value calculator.

To calculate the FVA, you will need to input the following information into the calculator:

• The amount of each payment
• The interest rate
• The number of payments
• The length of time over which the payments will be made

Once you have inputted this information, the calculator will output the future value of your annuity. The future value is simply the sum of all of the payments made, discounted for the time value of money.

• The amount of each payment: \$100
• The interest rate: 0.05%
• The number of payments: 12
• The length of time over which the payments will be made: 30 years

The future value of your annuity would be \$12,718.

## Tips for Planning for the Future Value of an Annuity

There are several things that you can do to plan for the future value of your annuity.

First, you will need to decide how much you want your payments to be worth in the future. This will help determine how much money you need to invest in your annuity.

Second, you will need to choose an appropriate interest rate for your goals.

Third, you will need to decide how long you want to have your annuity. This will help you determine the number of payments that you need to make.

Finally, you will need to find an insurance company that offers an annuity that meets your needs.

When you are planning for the future value of your annuity, it is essential to remember that the interest rate and the length of time over which the payments will be made can significantly impact the future value. Therefore, you should carefully consider these factors when choosing an annuity.

The future value of an annuity can be a great way to secure your financial future. By carefully planning for it, you can ensure that you have the money you need when you need it.

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