How to Calculate Annual Annuity Payments

Steps to Calculate Annual Annuity Payments

An annuity is a series of payments made at regular intervals. An annual annuity payment is a type of annuity payment that is made once a year. Knowing how to calculate the annual annuity payments can help you plan for the future and make wise investments.

Instructions

1. Determine the total payoff amount for your annuity. This amount should depend on the total principal you invested and how long you have been making payments.
2. Divide the total payoff amount by the number of years it takes to receive the full payoff.
3. For example, if you invested $100,000 over 30 years, divide $100,000 by 30. This equals $3,333.33.
4. Multiply the total annual annuity payment by 12 to calculate your total monthly annuity payments. Assuming you paid $3,333.33 per year in the example given, multiply $3,333.33 by 12, resulting in $40,000.
5. Divide the total monthly annuity payment by 28 or 29 days, depending on if the month has a leap day or not. For example, $40,000 divided by 28 is $1428.57, meaning you would receive approximately $1428.57 each day.