Fixed Annuity Calculator

A Fixed Annuity can provide a very secure, tax-deferred investment. It can provide a guaranteed minimum interest rate, with no taxes due on any earnings until they are withdrawn from the account. Use this calculator to help you determine how a Fixed Annuity might fit into your retirement plan.

Your fixed annuity could be worth ANNUITY_TOTAL_AF_CHARGE after YEARS_UNTIL_RETIREMENT years.

According to your inputs, your fixed annuity could be worth ANNUITY_TOTAL_BF_TAX at age AGE_OF_RETIREMENT. SURRENDER_INFO If, at that time, you withdrew the entire amount, the balance after taxes would be ANNUITY_TOTAL_AF_TAX. This assumes you earn RATE_OF_RETURN1 for INITIAL_RATE_YEARS year(s) and RATE_OF_RETURN2 for the remaining investment period. If you had put this savings into a taxable account it would be worth TOTAL_TAXABLE. **GRAPH** It is important to note that you only pay taxes on the amount you withdraw, the remaining balance will still earn interest that is tax-deferred. Very few people need to withdraw the entire balance in one lump sum. By making withdrawals gradually, or by making use of certain loan provisions available to many annuities, you can further increase the value of this tax-deferred investment.
Results with average expected interest rate:
Interest rateINITIAL_RATE_YEARS year(s) at RATE_OF_RETURN, RATE_OF_RETURN2 annually thereafter.
Annuity total before taxesANNUITY_TOTAL_BF_TAX
Surrender chargesANNUITY_CHARGE ( ANNUITY_PERCENT_CHARGE )
Annuity total after surrender chargesANNUITY_TOTAL_AF_CHARGE
Annuity total after taxes*ANNUITY_TOTAL_AF_TAX
Results at guaranteed minimum interest rate:
Interest rateINITIAL_RATE_YEARS year(s) at RATE_OF_RETURN1, RATE_OF_RETURN3 annually thereafter.
Annuity total before taxesANNUITY_MIN_TOTAL_BF_TAX
Surrender chargesANNUITY_MIN_CHARGE ( ANNUITY_PERCENT_CHARGE )
Annuity total after surrender chargesANNUITY_MIN_TOTAL_AF_CHARGE
Annuity total after taxes*ANNUITY_MIN_TOTAL_AF_TAX
Results of a taxable account:
Interest rateRATE_OF_RETURN
Total after taxes*TOTAL_TAXABLE

*Income tax for the fixed annuity is calculated by taking the total earnings times the marginal income tax rate of RETIREMENT_TAX_RATE that you expect in retirement. Taxes are paid only when the money is withdrawn. The taxable account deducts income taxes annually for any interest earned. It uses your current marginal income tax rate of CURRENT_TAX_RATE.

How is this different than an IRA?

A fixed annuity is an investment product designed to provide long term, tax-deferred savings. Over a period of years, a fixed annuity can create sizable tax savings. In this respect it is very similar to an IRA.

With a fixed annuity you do not receive a tax deduction on the money you deposit, but you don't pay taxes on any interest earned until you begin making withdrawals. This is similar to making non-deductible contributions to a traditional IRA. This is considerably less attractive than contributing to a Roth IRA. Unlike IRAs (both Roth IRAs and traditional IRAs) there are no annual contribution limits or income limits. Generally speaking, it is usually to your advantage to maximize your IRA contributions before you contribute to a fixed annuity.

Input Summary
Starting balanceSTARTING_BALANCE
Annual contributionANNUAL_CONTRIBUTION
Current ageCURRENT_AGE
Age at withdrawalAGE_OF_RETIREMENT
Years until withdrawalYEARS_UNTIL_RETIREMENT
Taxable account's expected returnRATE_OF_RETURN
Initial guaranteed interest rateRATE_OF_RETURN1 for INITIAL_RATE_YEARS year(s)
Expected average interest rateRATE_OF_RETURN2
Minimum guaranteed interest rateRATE_OF_RETURN3
Current tax rateCURRENT_TAX_RATE
Retirement tax rateRETIREMENT_TAX_RATE

Fixed Annuity Balances by Year

**REPEATING GROUP**

*Totals After Surrender Charges

Fixed Annuity Calculator Definitions

Fixed Annuity
A fixed annuity is an insurance product designed to provide long-term, tax-deferred savings. A fixed annuity can provide a guaranteed minimum rate of return but may have few investment options. You do not receive a tax deduction on the money you deposit, but you pay no taxes until you begin making withdrawals. There are no annual contribution limits or income limits. A fixed annuity could be a good option if you wish to increase your tax-deferred savings.

Fixed annuity contracts will have different rules, restrictions and expenses that will vary by insurance company and by product within an insurance company. To fully understand a fixed annuity, make sure you fully understand all options, restrictions and expenses for your specific annuity before you enter into such a contract. This calculator is not designed to describe a specific insurance product and should be used as a general illustration of the tax-deferred feature of a fixed annuity.

Starting balance
This is the initial amount that you will contribute to your fixed annuity.
Annual contribution
The amount you will contribute to your annuity each year.
Current age
Your current age.
Withdrawal age
Age you wish to withdraw your annuity balance. This calculator assumes that the year you start withdrawing funds, you do not make any contributions to your annuity. So if you start withdrawals at age 65, your last contribution would have happened when you were actually age 64.
Current tax rate
The current marginal tax rate you expect to pay on your taxable investments.
Retirement tax rate
The marginal tax rate you expect to pay on your investments at retirement.
Surrender charges
Surrender charges are a percent of the annuity balance you will be charged if you withdraw your annuity balance early. The actual surrender charges vary widely from annuity to annuity. Make sure to check with your investment adviser if you are unsure of the surrender charges that may apply to your particular annuity.
Taxable account's expected rate of return
The annual rate of return you would expect if you deposited this money into a taxable account. This calculator assumes that your return is compounded annually and your contributions are made at the beginning of each year.
Initial interest rate
This is the initial guaranteed interest rate for your fixed annuity.
Years initial rate is guaranteed
The number of years the initial interest rate is guaranteed.
Expected average interest rate
This is the interest rate you would expect to average after the initial interest rate is no longer guaranteed.
Minimum guaranteed interest rate
This is the interest rate that is guaranteed after the initial rate has ended.


The Best Financial Calculators Anywhere!

Put them on your website!

© 1998-2014 KJE Computer Solutions, LLC
Financial Calculators at http://www.dinkytown.net
(612) 331-2291
1730 New Brighton Blvd. PMB #111
Minneapolis, MN 55413