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The variable annuity calculator (what you may use as a deferred variable annuity calculator) allows you to answer any of the following questions related to a given variable annuity construction:

  • What will be my final balance?
  • What should be my opening balance?
  • How much should I contribute?
  • How long should I keep my annuity?
  • What is the required rate of return?

In addition, you can compare your final balance with a taxable scenario. For example, you can check the estimated balance adjusted by the federal income tax or a customized tax rate.

Additionally, you can analyze the result by following the progress of balances in the dynamic chart or the annuity table.

Read further, and we will explain the variable annuity definition, show how the variable annuity calculator works, and answer some interesting questions in the FAQ section.

If you would like to analyze a different type of annuity, you may check our annuity calculator, which we created for universal usage.

What is a variable annuity?

A variable annuity is an insurance product that offers long-term, tax-deferred savings. In particular, you do not receive a tax deduction on the contribution you deposit; however, you have no tax obligation until you begin the withdrawal period.

What are the variable annuity pros and cons?

While variable annuity contracts have different rules, restrictions, and expenses depending on the insurance company, we can categorize some standard features as variable annuity pros and cons.


  • Good option for tax-deferred savings plan;
  • No annual contribution limits or income limits;
  • Many states protect them from creditors; and
  • They are exempt from probate.


  • No tax deduction on the contribution;
  • It can generate significant taxes at the time of withdrawal;
  • Variable annuity fees are high in general; and
  • Underlying structure is complex.

What is the difference between fixed annuity vs variable annuity?

While a fixed annuity guarantees payment of a set amount for an agreed annuity term, a variable annuity can fluctuate depending on the returns realized by the mutual funds it is invested in.

How to use the variable annuity payment calculator?

You need to provide the below parameters to apply the variable annuity payout calculator.

As a first step, state the subject of your interest by choosing one of the following questions.

  • What will be my final balance?
  • What should be my opening balance?
  • How much should I contribute?
  • How long should I keep my annuity?
  • What is the required rate of return?

1. Main specifications

  • Starting balance - It is the opening balance at the beginning of the annuity.
  • Aimed final balance - Applicable only if you choose other than the first question.
  • Current age and withdrawal age (the expected age when you stop contributing and begin withdrawing from your annuity balance), or you can set the length of annuity.
  • Contribution - The amount that goes to your annuity account.
  • Annuity payment frequency - The regularity of annuity payouts.
  • Expected rate of return.
  • Annual growth rate - By this option, you can set a specific rate of change (increase or decrease) in your annuity payout.
  • Type of annuity advanced mode - You can choose between an annuity due (beginning of period) or an ordinary annuity (end of period).
  • Compounding frequency advanced mode - The calculator adds the frequency interest to the principal balance of your investment, or, in other words, how often you reinvest the earned return or interest.

2. Tax specifications

You can also apply an estimation for a counterfactual taxable account, which shows the balance if it were taxable.

You can choose between two options here:

  • Set manually - the calculator applies a given tax rate to your balances.
  • US federal income tax - if you choose this option, the tax brackets and rates applied in 2022 will be the base of the estimation. Note that the inflation rate extrapolates the tax brackets.

Further parameters to set if you choose estimation based on the US federal income tax:

  • Filings status;
  • Annual income;
  • Expected annual growth rate in income; and
  • Inflation rate - used for tax bracket calculator extrapolation.

When you set all the required parameters, you will immediately see the results summarized in a table. You can also follow the progress of your annuity balance in a dynamic chart and annuity table of the payment schedule.


How does a variable annuity work?

A variable annuity has an accumulation phase and a payout (annuitization or withdrawal) phase. During the accumulation phase, the payout (or the annual return) can fluctuate according to the performance of the underlying investment portfolio.

What are the risks of variable annuities?

You may take into consideration the below potential risks when entering into a variable annuity contract:

  • The return does not cover the expected fraction of variable annuity fees;
  • It is above expected taxes at the time of withdrawal; and
  • The annual return does not follow the expected figures.

Is the return on a variable annuity fixed?

No, the return on a variable annuity can fluctuate depending on the underlying instrument it is invested in.

What will be my final balance if I pay $1,000 annually for ten years with a 6% interest rate?

The final balance of your annuity is estimated to be $13.972 after paying $1,000 for 10 years annually, and the rate of return is 6%.

How do I calculate the balance of an annuity?

Follow the below steps to compute the final balance of an annuity.

  1. Take the rate of return in a decimal form plus 1 to the power of the periods (n), then deduct one (1 + r)n - 1.
  2. Divide the previous value by the rate of return.
  3. Multiply the value by the annuity payment (P), FV = (P * ((1 + r)n - 1) / r).

Variable annuity calculator disclaimer

You should consider the variable annuity calculator as a model for financial approximation. All payment figures, balances, and interest figures are estimates based on the data you provided in the specifications that are, despite our best effort, not exhaustive.

For this reason, we created the calculator for instructional purposes only. Still, if you experience a relevant drawback or encounter any inaccuracy, we are always pleased to receive useful feedback and advice.

Tibor Pál, PhD candidate
Annuity specifications
I'd like to know...
What will be my final balance?
Main specifications
Starting balance
Current age
Withdrawal age
Length of annuity
Annuity payment frequency
Expected rate of return
Annual growth rate
Tax specification
Setting option
US federal income tax
Filing status
Annual income
Expected annual growth in income
Inflation rate
The final balance of your annuity is estimated to be $1,079,079.29.
annuity table
Opening balance$10,000.00
Final balance before tax$1,079,079.29
Final balance if it were taxable$740,340.70
Total return$1,027,079.29
Number of contributions420
Annual contribution$1,200.00
Total contribution$42,000.00
YearOpening balanceYearly contributionYearly returnClosing balanceIncome taxTaxable account
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