Deferred Annuity Calculator
From a deferral period, annual payment, rate and years of payment, compute the present value of a deferred annuity.
Input Data
Results
At a glance:Deferred annuity PV = value an ordinary annuity (PMT x (1 - (1+r)^(-n))/r) at the end of a deferral period m, then discounted back m years: PV = [PMT x (1 - (1+r)^(-n))/r] / (1+r)^m. Example: defer 5y, then 10k/yr for 10y at 5% → PV at deferral end ≈77,217; PV today ≈60,466. Longer deferral or higher r → lower today's PV. WARNING: Ordinary annuity (end-of-year), fixed rate; real products add fees/mortality/guarantees. Education, not advice.
Formula
PV_ordinary = PMT × (1 − (1+r)^−n) / r.
PV_deferred = PV_ordinary × (1+r)^−d, where d = deferral periods.
$$$PV_{ord}=PMT\\cdot\\dfrac{1-(1+r)^{-n}}{r}$$$$$$PV = PV_{ord}\\times(1+r)^{-d}$$$$$$PMT$ $r$ $n$ $d$$$How to Use
- Enter the deferral years and payment years.
- Enter the annual payment and rate.
- View the PV at deferral end and the PV today.
FAQ
What is a deferred annuity?
An annuity whose payments begin only after a deferral period. You commit/fund now, but the income stream starts later — typical in retirement planning (accumulate then draw) and some insurance/endowment products.
Why discount the deferral-end value back to today?
Because the annuity's value at the end of the deferral is a future figure; to compare it with money today you must discount it by the deferral period at the rate. That gives the true present cost/benefit of committing now for later income.
How do deferral and rate affect the PV?
Both push value further out and discount it more: longer deferral (larger m) and higher rate (larger r) each lower today's PV. Intuition — money received later is worth less now, and a higher discount rate makes future money worth even less.
What should Hong Kong users watch?
Local deferred annuities/endowments (e.g. Qualified Deferred Annuity policies under tax deferral) carry fees, surrender penalties and guarantee/annuity-rate features that this simplified model ignores. Compare with MPF, bonds and deposits; check the insurer's illustration and surrender value. The IFEC provides retirement-product education. Education, not advice.
How is this different from an immediate annuity?
An immediate annuity starts paying almost at once (no deferral, m ≈ 0), so its PV is just the ordinary-annuity value. A deferred annuity inserts a waiting period m before payments, adding the extra discount step. Deferred suits 'save now, retire later'; immediate suits 'need income now'. Both share the annuity valuation core; only the timing of the first payment differs.
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References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.