Combining Two Future Value Calculations
In order to determine if the amount you currently have in an interest earning account will be enough to meet a future savings goal, you would need to use future value of a lump sum calculations.
If it turns out that the future value of your lump sum balance is enough to achieve the goal, no further calculations would be necessary.
On the other hand, if the future value of your current balance turns out to be less than your future savings goal (referred to as a savings gap), you would then need to use the future value of an annuity calculation to calculate how much and how often you would need to add to the account in order to make up for the shortfall.
What is an "Future Value of an Annuity Factor?"
For our purposes, the future value of an annuity factor is equal to the future value of a series of $1 deposits, which is calculated as follows:
For example, for a series of $1 deposits made at the end of each year into an account earning 8% annual interest for a period of 10 years, the annuity factor would be equal to (1 + .08) to the 10th power (1.08 x 1.08 x 1.08 ...), or 14.487.
Closing the Savings Gap
Once you have determined the gap between the future value of your present savings balance and your future savings goal, and you have calculated the future value of an annuity factor, all that remains is to divide the savings gap by the annuity factor.
The result is the periodic annuity payment required to close the savings gap, thereby enabling you to achieve your future savings goal.