# What Is an Annuity Table?

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## What Is an Annuity Table?

An annuity table helps you determine the present value of an annuity at a given time. The table considers how much money you have put into the annuity and how long it has been invested.

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 cash value of all of your future annuity payments. It takes into account the rate of return 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

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

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 instance) will have different tables. Talk to your advisor or annuity company to make sure you are using the correct table.

As discussed above, an annuity table helps you determine the present value of an annuity. Once you’ve found that number, you can make more informed investment decisions to build the best possible retirement portfolio for you.

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.

## 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.