How does the fixed annuity calculator work?
Enter your deposit, the guaranteed annual rate, the term in years, how often interest compounds and your tax bracket. The calculator grows your money at that rate with no tax taken out along the way, gives you a year-by-year schedule, and then builds a matching CD at the same rate that gets taxed every year, so you can see in dollars exactly what tax deferral is worth over your specific term.
What does a fixed annuity actually pay?
Put $100,000 into a fixed annuity guaranteeing 6% and you would collect about $6,000 a year, roughly $500 a month, if you took the interest as income. Let that same $6,000-a-year growth stay inside the contract and compound instead, and after five years the balance climbs to around $133,800, all of it still untaxed. Your own numbers hinge on the rate you lock in, how much you deposit, and the length of your term. Use the calculator below: enter your deposit, the guaranteed rate, the term and how interest compounds, and you will get a year-by-year growth schedule plus a comparison against a CD earning the identical rate.
How the calculator gets there. It takes your deposit, compounds it at the guaranteed rate for however many years you choose, and defers tax on every year's growth until the very end. Because nothing gets skimmed off for taxes along the way, the contract finishes with more money than a CD paying that same rate would.
How to use the fixed annuity calculator
Three inputs are all it takes to get a solid projection, plus one more if you want the tax picture.
- Enter your deposit. This is the lump sum you are considering moving in, for example $100,000, whether it is coming from a CD, a savings account or a maturing annuity.
- Enter the guaranteed rate and the term. Type in the locked annual rate the contract offers and the number of years it is guaranteed for, typically somewhere between 3 and 10.
- Pick the compounding schedule. Choose annual, semiannual, quarterly, monthly or daily crediting, whichever matches the contract you are pricing.
- Add your tax bracket. This lets the calculator build the CD comparison so you can see the after-tax dollar difference, not just the raw rate difference.
How a fixed annuity grows over its term
People also call a fixed annuity a multi-year guaranteed annuity, or MYGA. Either name points to the same thing: a promise from an insurance carrier to pay one locked interest rate for one set stretch of years, usually somewhere between 3 and 10. While that promise runs, the interest piles up inside the contract with no tax bill attached, and nothing is owed until the day you actually pull money out. That deferral is the single mechanic that lets a MYGA finish ahead of a CD carrying the identical headline rate. The IRS spells out how this deferral works in the annuity income rules under Publication 575.
Why the math favors the MYGA over an identical-rate CD
A 6-year CD at 5.75% and a 6-year MYGA at 5.75% look identical on paper. They are not. The CD's interest gets taxed every single year, whether or not you withdraw it, while the MYGA's interest sits inside the contract compounding untouched. After 6 years at 5.75%, a $90,000 MYGA reaches roughly $126,200, versus about $118,300 of after-tax value for the same $90,000 in a CD taxed annually at a 22% bracket. You will still owe ordinary income tax on the MYGA's gain whenever you eventually withdraw it, so cashing the entire contract out at year 6 in that same 22% bracket narrows the after-tax edge to something more modest. That edge widens the longer the balance is left to compound, the higher your bracket while the CD keeps getting taxed, and especially if you end up withdrawing the MYGA in a lower-bracket retirement year. Run your exact figures in the CD vs annuity calculator.
Example: $90,000 in a 6-year fixed annuity
The table below assumes a hypothetical $90,000 deposit growing at a locked 5.75% rate, compounded annually, with no money taken out along the way.
| Year | Starting value | Interest at 5.75% | Ending value |
|---|---|---|---|
| 1 | $90,000 | $5,175 | $95,175 |
| 2 | $95,175 | $5,473 | $100,648 |
| 3 | $100,648 | $5,787 | $106,435 |
| 4 | $106,435 | $6,120 | $112,555 |
| 5 | $112,555 | $6,472 | $119,027 |
| 6 | $119,027 | $6,844 | $125,871 |
By the end of year six, this hypothetical contract has generated about $35,871 in guaranteed interest, none of it touched by taxes along the way.
A real-world walk-through: how Peter uses the calculator
Peter is 64 and retiring in two years. A $180,000 CD just matured, and he is trying to decide between rolling it into a new CD or moving to a 6-year MYGA at a comparable rate. He is looking for safety without giving up much upside.
He opens the calculator and enters a $180,000 deposit, a 5.75% guaranteed rate, and a 6-year term. The schedule shows his balance climbing from $180,000 to roughly $251,700 by the end of year six, about $71,700 of guaranteed growth, none of it taxed until he takes it out.
The tax-aware comparison fills in the rest of the picture. In a CD, Peter would pay tax on the interest every single year at his 22% bracket, which would drag his final balance down to closer to $237,300. The MYGA leaves him with roughly $14,400 more, purely because the growth was never interrupted by an annual tax bill. Seeing the gap, Peter decides to split the money instead, putting $90,000 into a 4-year MYGA and $90,000 into a 6-year MYGA so part of it becomes available sooner.
Your own results will shift with the rate and bracket you enter, but the underlying pattern holds steady: at an identical rate, deferring the tax bill lets the annuity finish ahead of the CD.
Fixed annuity vs fixed index annuity
This calculator models a true fixed-rate MYGA, where the rate never moves for the whole term. A fixed index annuity is built differently: instead of a set rate, it credits interest tied to a market index, capped or limited by a participation rate, but with a floor that protects your principal from index losses. If you want to model guaranteed lifetime income instead of straight accumulation, try the income rider calculator, or the immediate annuity calculator for a paycheck starting right away.
Does the compounding schedule really matter?
Most MYGAs credit interest once a year, though some carriers offer semiannual or monthly crediting. At a 5.75% rate, the difference between annual and monthly compounding on a $90,000 contract over 6 years amounts to roughly $150 to $200, not enough to change your decision on its own. The rate itself and the tax treatment do far more heavy lifting than the compounding frequency. To see that mechanic in isolation, try the compound interest calculator.
What surrender charges and free withdrawals mean for this projection
This calculator assumes you ride the contract out to the end of its surrender period without touching the principal. Pull money out early and you will run into a surrender charge, commonly starting around 6% to 9% in the first year and stepping down to zero by the end of the term. Most MYGAs still let you withdraw 5% to 10% of the value each year penalty-free, and many waive the charge entirely if you need the money for a nursing home stay or a terminal diagnosis. Read more on how surrender charges actually work before you commit to a term.
Who gets the most use out of this calculator
This tool is most useful if you are weighing a MYGA against a CD or money market fund, trying to decide between contract lengths, or figuring out how much guaranteed growth a slice of your savings could produce before you retire. For current numbers, check today's MYGA rates, then plug the real figures into the calculator above.
Frequently asked questions
Is a MYGA as safe as a CD?
Both sit at the conservative end of the spectrum, but the safety net underneath each one comes from a different place. A bank CD's cushion is federal deposit insurance, capped at $250,000 for each depositor at each bank. A MYGA's cushion starts with the issuing carrier's own claims-paying strength, backstopped further by your state's guaranty association, typically to a limit around $250,000 per owner per insurer, though that number shifts from state to state. The National Organization of Life and Health Insurance Guaranty Associations publishes the exact figure for where you live. Once your savings exceed the FDIC cap, a strong MYGA carrier becomes a reasonable, often better-paying, place to put the excess.
What are my choices once the guarantee period ends?
You typically get about a 30-day window to decide. Your options usually include taking the full balance as a lump sum, letting the contract renew at whatever new rate the carrier is offering, moving the money to a different carrier through a tax-free 1035 exchange, or converting the balance into a stream of guaranteed income. Many owners simply roll into a fresh MYGA at whichever carrier is paying the most at that moment.
How is the interest inside a MYGA taxed?
While the money sits inside the contract, none of the growth is taxed. Once you start withdrawing, the interest portion of each withdrawal is taxed as ordinary income, not as a capital gain. If you funded the contract with money that was already taxed, your original deposit comes back to you tax-free and only the growth is taxable. If the money came from an IRA or 401(k), the entire withdrawal is taxable.
What rate can I realistically expect?
Rates shift often and depend heavily on the term you choose, the carrier's rating and how large your deposit is. Rather than quote a number here that will be stale by the time you read it, check the live rate box on this page or our full MYGA rate guide for what is currently available by term.
Can I take the interest out each year instead of letting it grow?
Many MYGAs give you a choice between full deferral, where interest stays in the contract and compounds, or a systematic withdrawal option, where you draw the interest out as income on a monthly or annual schedule while your principal stays intact. Taking income this way gives up some of the tax-deferral benefit in exchange for cash flow you can use right away.
How accurate is a fixed annuity calculator's projection?
For a true fixed-rate MYGA, the math is exact because the rate is contractually guaranteed and does not move once you sign. What changes your real outcome is the rate you actually secure, the compounding schedule the carrier uses, and whether you take any penalty-free withdrawals along the way. For a number tied to a specific product and carrier, a licensed strategist can run a personalized illustration.
Sources
Educational only, not investment, tax or legal advice. Tax Free Wealth Plan LLC is a licensed insurance agency, not a registered investment adviser or broker-dealer. Annuities are not bank deposits, are not FDIC insured and are not guaranteed by any government agency. Guarantees are backed solely by the claims-paying ability of the issuing insurance company. Features, rates and availability vary by state and change over time; the contract and disclosure documents govern.