This **savings annuity calculator** forecasts the growth of your annuities during accumulation phase consisting in an initial deposit + yearly / monthly additions. There is in depth information on this subject below the web form.

## How does this savings annuity calculator work?

Every annuity has two phases: one is the accumulation phase by which the funds are saved and invested and the other one is the benefits time which is the time when the client gets withdrawals over a certain period of time. This financial tool estimated the growth for any starting deposit with yearly and/or monthly contributions to it by applying the compound interest formula with the desired frequency such as annually, semiannually, quarterly, monthly or even continuously. Its algorithm takes account of the following data that should be provided:

- Initial deposit representing the starting amount deposited;
- Yearly addition meaning the regular amount of money added year by year;
- Monthly addition which is the fixed amount of money added month by month to the savings account;
- Addition moment that can be either at the beginning of each compounding period or at the end of it;
- Savings term meaning the chosen time frame to make savings and deposit them accordingly;
- Rate of interest which represents the average return rate that the bank/ financial institution offers;
- Compounding frequency which explains how frequent the interest gets compounded. In case on annuity this is set to be “Annually”, but when is the case it can be changed to one of the other options such as: semiannually, quarterly, monthly, continuously.
- Rate of inflation which is an optional field for the average inflation percent for the period specified;
- Tax rate which represents the average percentage of how much tax you are going to pay on the interest earned.

By default this application which takes account of a fixed investment’s return rate and fixed contributions generates as well a detailed chart presenting the evolution and the growth of the account, that can be opened by pressing the “OPEN DETAILED CHART” button.

## Example of a result

In case of an account that starts with a $50,000 deposit with an early contribution of $5,000 and a monthly add of $1,000, with a fixed interest rate of 3.5%, inflation percent of 1.5 and tax rate of 1%, over 10 years compounded annually, this *savings annuity calculator* will display the following results:

Account summary:

Final balance after 10 years | $274,046.94 |

Final balance adjusted with inflation | $236,137.27 |

Total principal saved | $220,000.00 |

Total interest earned | $54,592.87 |

Total tax paid for the interest earned | $545.93 |

## Few reasons why the accumulation phase is important

If we look at the main scope of an annuity account that is to ensure adecent standard of life during retirement or during the desired payout phase it may raise few conclusions that highlight its importance:

- The sooner theannuity investor starts the accumulation the better is. This is due to the fact that by starting to save earlier he will most probably increase the amount of consumption he will be able to have later in life.
- The higher the savings are made either regularly or occasionally the better is. This is important to know as whenever someone has the chance to save he should take advantage of it because later in life this attitude may prove extremely beneficial.
- This phase once settled up, can help in managing in a more strictly way the personal finances and the monthly budget, thus to a better control over the current spending.

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