Annuity Calculator

At some point in your life you may have had to make a series of fixed payments over a period of time – such as rent or car payments – or maybe you have received a series of payments over a period of time, such as structured settlement payments. These are called annuities.

Annuities are essentially a series of fixed payments required from you or paid to you at a specified frequency over the course of a fixed period of time. The most common payment frequencies are yearly (once a year), semi-annually (twice a year), quarterly (four times a year) and monthly (once a month). There are two basic types of annuities: ordinary annuities and annuities due.
Original annuities are payments which are required at the end of each period. On the other hand, annuities due are payments which are required at the beginning of each period. Rent is a good example of an annuity due. You are usually required to pay rent when you first move in at the beginning of the month, and then on the first of each month thereafter.

Since original annuities and annuities due are different, the way you calculate their present and future value is slightly different as well. When you are receiving a structured settlement from an insurance company, the most valuable use of an annuity calculator will be in calculating the present value of an ordinary annuity.

Calculating the present value of an ordinary annuity allows you to more closely determine today’s value of a series of future payments. If you are an annuitant receiving an ordinary annuity, the annuity calculator is a helpful tool in that you can see exactly what your future payments are worth today. You may be surprised to find that the present value of your annuity is not as much as you thought it might be. Why is this? This is due to factors such as inflation and the time value of money which shows us that a dollar today is not worth the same as a dollar 20 years from today. Additionally, the value may be less than you anticipated because if you are planning on selling all or a portion of these future payments, you must pay a fee in order to assist in the processing and legal aspects of one of these transfers. It is always a good idea to speak with a specialist in purchasing structured settlement payments. A specialist will not only have an annuity calculator but they will be able to explain the additional factors in determining the present value of your payments.