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Take the Guess Work out of Retirement Using Available Annuity Tools

How much will you need to invest at age 40 to assure that at age 65 you will be able to withdraw $1,000 per month for life from a deferred annuity? Trying to figure out that answer in your head sounds intimidating. Well, with a few pieces of information and an annuity calculator, you can have your answer in minutes.

If creating and maximizing an income stream is important to you, an independent insurance professional can use insurance company tools/calculators to assist in finding the annuity that best fits your desire to maximize your monthly payouts.

Annuity tools and calculators allow you to create different scenarios so you can know, with near certainty, what your monthly payout will be. Change the interest rate or change the withdrawal date and you will immediately see how much your monthly payout changes. By working with your independent insurance professional, you can see what you need to do today to get the income you need in the future.

Factors that affect your monthly payout

The payout on an annuity depends on many different factors. Among those factors are the amount of the annuity, the length of time that the payout is deferred, the interest rate that you earn, and your life expectancy. While you must read the terms of your annuity contract carefully, in general, your monthly payments will be higher if your life expectancy at the time of your first payout is shorter.

What is entered into the annuity calculator?

Annuity tools and calculators can require different data to be input depending upon the type of annuity you are analyzing and the information you are seeking. A fixed annuity is different from a variable annuity. A deferred annuity is different from an immediate annuity. Calculators are designed to determine payout amounts for all different types of annuities.

As an example, we will take a look at the typical questions that might need to be answered if you are buying a deferred fixed-income annuity. Depending upon how your deferred annuity is structured, you may make only one premium payment when you purchase it, or you may have the option of making additional payments during the accumulation (deferral) period.

Beginning balance

This is the face value of the annuity or the amount you pay in up front.

Annual contribution

Payments you make each year in addition to your initial payment when you first purchased the annuity. Some annuities have this feature and some do not.


Your current age. Some calculators may ask for your date of birth.
Withdrawal age — Your age or the date that you wish to start your payout or stream of income.

Interest rate

This is the guaranteed initial interest rate that is shown in your annuity contract. It often is limited to a certain number of years before readjusting to prevailing interest rates. When entering a figure, you should try to estimate the average interest rate you will receive over the entire deferral period.

Tax calculations

Some annuity tools add this component into the calculator to show you the amount you will receive after taxes. While annuities are tax-deferred, you may still have some tax liability when you begin to withdraw funds.

When you sit down with an independent insurance professional to purchase an annuity, he or she can use an annuity tool/calculator to identify the right type of annuity to help you meet your retirement goals. After you know what it will take to meet your retirement goals, your independent agent can compare products among a universe of insurance companies and find you the best annuity with the best payout.