Online fixed annuity growth calculator to project contract and surrender value or the initial deposit needed from rates, fees, contributions, and term.
Fixed Annuity Growth Formula
This calculator models annual crediting followed by an annual asset-based fee. The effective annual growth factor is:
g = (1 + r) * (1 - f)
With an initial deposit and end-of-year contributions, the ending value is:
FV = PV * g^n + PMT * (g^n - 1) / (g - 1)
The estimated surrender value applies the selected surrender charge to the ending value:
Surrender Value = FV * (1 - s)
Variables:
- g is the net annual growth factor after the modeled annual fee
- r is the annual credited rate as a decimal
- f is the annual fee rate as a decimal
- PV is the initial deposit
- PMT is the annual end-of-year contribution
- n is the number of years
- s is the surrender-charge rate at the end of the term
A contract may credit interest more frequently, impose flat fees, or apply a market-value adjustment. Use the insurer's guaranteed and current values when those are available.
Fixed Annuity Growth Reference
These values show how a $100,000 deposit grows with no additional contributions or surrender charge.
| Net annual growth | 5 years | 10 years | 15 years |
|---|---|---|---|
| 2% | $110,408 | $121,899 | $134,587 |
| 3% | $115,927 | $134,392 | $155,797 |
| 4% | $121,665 | $148,024 | $180,094 |
| 5% | $127,628 | $162,889 | $207,893 |
Example Problems
Example 1: Project the ending value.
A $100,000 fixed annuity credits 4.5% annually, charges a 0.5% annual asset-based fee, and is held for 10 years.
The modeled net factor is 1.039775. The ending contract value is about $147,700 before any surrender charge.
Example 2: Account for a surrender charge.
If the contract value is $147,700 and a 3% surrender charge still applies, the estimated amount available is $143,269.
The $4,431 difference is the modeled surrender charge.
Frequently Asked Questions
Is a fixed annuity rate guaranteed for the full term?
Some contracts guarantee a rate for a stated period, while others can reset subject to a minimum guarantee. Enter the rate you want to model and compare it with the contract's guaranteed schedule.
What fees should I enter?
Enter an annual percentage fee only when the contract or rider charges one against account value. Many simple fixed annuities do not have an asset-based fee but can have surrender charges.
Why can the surrender value be lower than the contract value?
A surrender charge reduces the amount available when money is withdrawn during the surrender period. Some contracts can also apply a market-value adjustment that is not included here.
