If you’re interested in starting to invest for you or your children’s future, knowing the present value of the amount of money you wish to save is valuable information. The present value of an annuity calculator will tell you how much you’ll need to put away by the time you start withdrawing money from your investment to be able to withdrawal a certain amount of money in equal intervals in the future.

The present value of an annuity calculation can be especially useful if you’re planning your retirement. Say you plan to retire at age 65, and you want to have enough money saved to withdrawal equal amounts annually until age 85. If you know that you will need $50,000 per year to retire comfortably at age 65, and that you expect to need that amount for 20 years beyond retirement, you’ll be able to calculate the amount you need to save in total based on an average interest rate on your investments.

In the above example, you’ll input $50,000 into the “Payment amount ($)” line. Assume that you can expect a 5% rate of return on your investments, and input this into the appropriate line. You’ll need to sustain this annuity for 20 years, so input “20″ into the “Number of years (#)” line. This is an annual payment. You will find that you will need to save $623,110.52 for your retirement if you plan on withdrawing $50,000 per year over 20 years from an account that earns 5% interest.

This calculator can also be used for college savings calculations. Say you’d like to pay $10,000 per year towards your child’s college education, and that they will be in college for four years. As above, let’s assume that you can invest the money in an account earning an average yield of 5%.

In this example, you’ll input $10,000 into the “Payment amount ($)” line. As with the retirement example, use 5% as the interest. The number of years is 4, and this is an annual payment. To contribute $10,000 per year to your child’s college tuition and fees for four years, you’ll need to save $35,459.51 by the time they begin their college education.

You can also use the present value calculator available on the website to calculate how much you’d need to invest today at a specified rate of return to meet a specific savings goal in the future. This calculator will help you understand that saving now and letting your money earn interest will be much more valuable than waiting to save and losing out on potential interest earnings.

While the present value of an annuity and the simple present value calculators can help you understand how much you’ll need to save to meet your savings goals and have the right amount of money to withdrawal a specified amount annually, consulting a financial professional is advisable. A financial advisor can help you choose the specific investments you’ll need to make to reach your savings goals.

The calculators and examples presented here are simply for illustrative purposes, and will help you get an idea of how much you’ll need to save in total. A financial professional will help you figure out how to utilize your financial resources to meet the goals you have calculated and will be able to verify any calculations you have made using the available calculators.