Future Value of Annuity

Time Value of Money
Updated Apr 2026 • Has calculator

How much a series of equal periodic deposits will grow to at a given interest rate.

What is FV of Annuity?

The future value of an annuity calculates the total accumulated value of a series of equal, equally-spaced contributions made over time, each earning compound interest. It is the key formula behind retirement savings projections: if you contribute a fixed amount each period to a 401(k) or IRA, FVA tells you the nest egg you will accumulate by a given date. Unlike simple compounding of a single lump sum, FVA accounts for the fact that each contribution earns compound interest for a different number of periods.

Formula

FVA = PMT × [(1 + r)^n − 1] ÷ r

Worked Example

Worked example — 401(k) Retirement Savings — Illustrative Example

30-year horizon at 7% annual return

Step 1  Annual contribution (PMT): $6,000 (IRS limit for 2024 under age 50)
Step 2  Annual return rate: 7% (long-run equity estimate)
Step 3  Periods: 30 years
Step 4  FVA = $6,000 × [(1.07)^30 − 1] / 0.07 = $6,000 × 94.461 = $566,765
Step 5  → Contributing $6,000/year for 30 years at 7% accumulates ~$566,765

Source: IRS — Retirement Topics: 401(k) and Profit-Sharing Plan Contribution Limits (2024-01-01)

Calculate FV of Annuity

Regular contribution per period

Expected annual growth rate

Investment horizon in years

Future Value of Annuity

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Not investment advice.

How to Interpret FV of Annuity

< 50000
Small Accumulation — increase contributions or rate
50000 – 500000
Solid Nest Egg — on track for retirement
> 500000
Strong Accumulation — compounding in full effect

📚 Time Value of Money — Complete the path

  1. Present Value
  2. Future Value
  3. PV of Annuity
  4. FV of Annuity
  5. Growing Perpetuity
Sources
  1. CFA Institute — Fixed Income & Time Value of Money, 7th ed.
  2. IRS — 401(k) Contribution Limits