What Is an Annuity Table and How Do You Read One?

Annuities can help you plan for your retirement by providing a guaranteed source of income for you and your family when you reach your golden years. They aren’t the simplest of investments, though, and sometimes it can be difficult to know exactly how much your annuity is worth. An annuity table can help with that by allowing you to easily calculate the present value of your annuity. This information allows you to make informed decisions about what steps to take to plan for your retirement.

If you need help with annuities or retirement planning, a financial advisor can work with you to create a strategy based on your finances.

What Is an Annuity Table?

An annuity table helps you determine the present value of an annuity at a given time.The table provides annuity factors used to calculate payouts based on IRS life expectancy tables.

Of course, for this information to be useful, you’ll need to know what the present value of an annuity is and how to interpret it. The present value of an annuity is the present cash value of all of your future annuity payments. It takes into account the rate of return or discount rate and the total number of payments you have remaining. If you don’t have an annuity table available, there is a formula that you can use to calculate the present value of an annuity:

P = PMT x ((1 – (1 / (1 + r) ^ -n)) / r)

The variables are defined as follows:

P = the present value of the annuity
PMT = the amount of each payment you get from the annuity in dollars
R = the interest (also called the discount rate)
N = the number of payments you still have to receive

How to Read an Annuity Table

An annuity table lets you quickly find the present value of future payments by matching your discount rate and payment period on the chart.

With an annuity table, you won’t need to do the calculation. You can get the information you need simply from reading the chart.

An annuity table typically has the number of payments on the y-axis and the discount rate on the x-axis. Find both of them for your annuity on the table, and then find the cell where they intersect. Multiply the number in that cell by the amount of money you get each period. That number is the present value of your annuity. Here is the annuity table for an ordinary annuity:

Annuity Table for Ordinary Annuities

n	1%	2%	3%	4%	5%	6%	8%	10%	12%
1	0.990	0.980	0.971	0.962	0.952	0.943	0.926	0.909	0.893
2	1.970	1.942	1.913	1.886	1.859	1.833	1.783	1.736	1.690
3	2.941	2.884	2.829	2.775	2.723	2.673	2.577	2.487	2.402
4	3.902	3.808	3.717	3.630	3.546	3.465	3.312	3.170	3.037
5	4.853	4.713	4.580	4.452	4.329	4.212	3.993	3.791	3.605
6	5.795	5.601	5.417	5.242	5.076	4.917	4.623	4.355	4.111
7	6.728	6.472	6.230	6.002	5.786	5.582	5.206	4.868	4.564
8	7.652	7.325	7.020	6.733	6.463	6.209	5.747	5.334	4.968
9	8.566	8.162	7.786	7.436	7.108	6.802	6.247	5.759	5.328
10	9.471	8.983	8.530	8.111	7.722	7.360	6.710	6.145	5.650
11	10.368	9.787	9.253	8.760	8.306	7.887	7.139	6.495	5.938
12	11.255	10.575	9.954	9.385	8.863	8.384	7.536	6.814	6.194
13	12.134	11.348	10.635	9.986	9.394	8.853	7.904	7.103	6.424
14	13.004	12.106	11.296	10.563	9.899	9.295	8.244	7.367	6.628
15	13.865	12.849	11.938	11.118	10.380	9.712	8.559	7.606	6.811
16	14.718	13.578	12.561	11.652	10.838	10.106	8.851	7.824	6.974
17	15.562	14.292	13.166	12.166	11.274	10.477	9.122	8.022	7.120
18	16.398	14.992	13.754	12.659	11.690	10.828	9.372	8.201	7.250
19	17.226	15.678	14.324	13.134	12.085	11.158	9.604	8.365	7.366
20	18.046	16.351	14.877	13.590	12.462	11.470	9.818	8.514	7.466
21	18.857	17.011	15.415	14.029	12.821	11.764	10.017	8.649	7.562
22	19.660	17.658	15.937	14.451	13.163	12.042	10.201	8.772	7.645
23	20.456	18.292	16.444	14.857	13.489	12.303	10.371	8.883	7.718
24	21.243	18.914	16.936	15.247	13.799	12.550	10.529	8.985	7.784
25	22.023	19.523	17.413	15.622	14.094	12.783	10.675	9.077	7.843
26	22.795	20.121	17.877	15.983	14.375	13.003	10.810	9.161	7.896
27	23.560	20.707	18.327	16.330	14.643	13.211	10.935	9.237	7.943
28	24.316	21.281	18.764	16.663	14.898	13.406	11.051	9.307	7.984
29	25.066	21.844	19.188	16.984	15.141	13.591	11.158	9.370	8.022
30	25.808	22.396	19.600	17.292	15.372	13.765	11.258	9.427	8.055

Here’s an example using the table above: Let’s say you have an annuity that pays you $1,000 per month at a 6% discount rate and you have eight payments remaining. Find eight periods and 6% on the chart. The cell where they intersect reads 6.210. Multiply that by $1,000, and you get a present value of $6,210.

Different types of annuities (variable annuities, for example) will have different tables. Talk to your advisor or annuity company to make sure you are using the correct table.

How an Annuity Table Can Help You

An annuity table helps estimate the present value of future payments to compare different retirement income options.

An annuity table shows the present value of a series of future payments. This information can help you evaluate annuity options and understand how different payout structures may affect your retirement income.

Lottery winners, for instance, often have to make a decision about whether to take a lump sum payment or take their money in the form of an annuity. Using the annuity table, you can see what the present value of the annuity is. If it is less than the lump sum offered, taking the lump sum and investing it is probably the better option.

For more common use, you can use the annuity table to simply know how much your annuity is worth so that you have a clearer picture of your portfolio’s value.

Limitations of Annuity Tables

While annuity tables can be a quick way to estimate the present value of your payments, they have some limitations. Tables are built using fixed discount rates and a set number of periods, which may not reflect your actual situation. For example, if interest rates move or if your annuity contract has variable or inflation-adjusted payments, the numbers in a standard table may not give an accurate picture.

Tables also assume that payments are made at regular intervals and remain the same amount over time. Many real-world annuities, however, include riders, step-ups, or cost-of-living adjustments that alter the payment stream. These features can make the actual present value higher or lower than what the table shows.

Because tables are based on simplified assumptions, they work best for fixed, predictable annuities. For more complex products, such as variable or indexed annuities, financial modeling or software is often required to measure the present value accurately.

Another drawback is that tables don’t account for taxes. The income you receive from an annuity may be partially taxable depending on whether you funded it with pre-tax or after-tax dollars. Factoring in your personal tax situation is important when comparing the value of different payout options.

For these reasons, while annuity tables are a useful starting point, they shouldn’t be the only tool you rely on. Combining them with calculators, financial software, or guidance from a professional can help you make more precise decisions about retirement income.

Bottom Line

Using basic information about your annuity, an annuity table can help you find out the present value of your annuity. Once you have this information you can make more informed decisions about your finances because you’ll know exactly how much your annuity is worth in current dollars, given an assumed discount rate. Make sure you’re using the right table for the type of annuity you have.

Retirement Tips

For help with annuities, a financial advisor can help you determine how it fits into your retirement. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If annuities aren’t your speed, explore other options for retirement income. At the very least, you should invest in your 401(k), provided your company offers one. Find out the projected value of your 401(k) by the time you retire with our free 401(k) calculator.
Don’t forget, you’ll also likely receive some money from the government when you retire. Find out what your check from Uncle Sam might look like with SmartAsset’s Social Security calculator.