Deferred Annuity Calculator
Enter a lump-sum premium, annual growth rate, deferral period and payout horizon to calculate the annual income a deferred annuity will pay.
%
years
years
Payment timing
Equal annual payment received during the payout period
- 1
Accumulated value at payout start
100,000 × (1 + 0.05)ⁿ = 162,889.46n = 10 years at 5% per year. - 2
Annuity factor
1 − (1 + 0.05)^(−20) = 0.623111 - 3
Annual payment
162,889.46 × 0.05 ÷ 0.623111 = 13,070.67
How does this calculator work?
A deferred annuity grows your lump sum at a fixed rate during the deferral period (AV = PV × (1 + r)^n), then pays equal annual income from the accumulated fund (PMT = AV × r / (1 − (1 + r)^(−t))). Longer deferral means significantly higher income due to compounding. This model assumes a fixed rate and no fees; real insurance products add mortality charges and may credit variable returns.
Formula
How this is calculated
A deferred annuity has two distinct phases. During the **accumulation (deferral) phase**, the single premium (or a series of premiums — this calculator assumes one lump sum) grows at the assumed annual rate using compound interest: Accumulated Value = PV × (1 + r)^n, where n is the deferral period in years. No payments are made during this phase.
At the end of the deferral period, the **payout phase** begins. The accumulated fund is converted into a series of equal annual payments over the chosen payout horizon. The payment formula is the present-value-of-annuity rearrangement: PMT = AV × r ÷ (1 − (1 + r)^(−t)), where t is the number of payout years. An ordinary annuity pays at the end of each year; an annuity-due pays at the start, which effectively shifts each payment one year earlier and yields a slightly different amount.
This model assumes a fixed crediting rate throughout both phases, no fees, no mortality risk and no inflation adjustment — all simplifications relative to real insurance products. Actual deferred annuities from insurers involve surrender charges, mortality and expense fees, varying crediting rates and, for variable annuities, market-linked returns. Use this calculator as a planning tool to understand the mechanics; consult a financial adviser for product-specific figures.
Frequently asked questions
A deferred annuity is an insurance or investment contract where you deposit a premium now, let it grow during a deferral period, and then receive regular income payments starting at a future date — commonly used to fund retirement.
An immediate annuity starts paying within one period of the premium payment (no accumulation phase). A deferred annuity has a gap — the deferral period — during which the fund grows before payments begin.
A longer deferral lets the fund compound for more years, growing the accumulated value and therefore the annual payout significantly. For example, at 5% over 10 years a $100k premium grows to ~$163k; over 20 years to ~$265k, roughly doubling the annual income.
Also known as
TG we-Calculate Editorial Team. (2026). Deferred Annuity Calculator [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/deferred-annuity-calculator
TG we-Calculate Editorial Team. "Deferred Annuity Calculator." TG we-Calculate. 2026. https://we-calculate.com/calculator/deferred-annuity-calculator.
TG we-Calculate Editorial Team, "Deferred Annuity Calculator," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/deferred-annuity-calculator
@misc{wecalculate_deferred_annuity_calculator, title = {Deferred Annuity Calculator}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/deferred-annuity-calculator}}, year = {2026}, note = {TG we-Calculate} }
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