Find out how much lifetime income your savings could buy. Or, if you know
how much income you need, learn what it will cost upfront. Annuity terms are defined below.
Instead of calculating your annuity needs alone, you may want to evaluate all aspects of your retirement situation.
The NewRetirement Retirement Calculator can help you assess your annuity decision in context of your overall retirement plan.
Use the NewRetirement
for the answers you need.
Annuity: An annuity is a financial
product sold by insurance companies that provides a stream of payments
over time to the purchaser (annuitant). There are a lot of different
flavors of annuity contracts and they can be complex, however they can
provide a number of benefits to the user including lifetime income and
annual adjustments to your cost of living expense.
Lifetime Annuity: A lifetime annuity is a financial
product you can purchase with a lump sum of money for which you will receive income
for the rest of your lifetime. A lifetime annuity guarantees payment of a predetermined
amount of money for the rest of your life. This is different from a term annuity which
only pays you for a fixed amount of time.
Immediate Lifetime Annuity: An immediate annuity provides
income to the purchaser that starts as soon as they deposit a lump sum and the payments
last for the lifetime of the purchaser or for the lifetime of the purchaser and his or
her spouse (or joint annuitant) or for some set amount of time (5, 10, 20 years). This
can also be called a Single Premium Immediate Annuity (SPIA). Many people roll over tax
qualified funds into a "tax-deferred" immediate annuity, because in many cases the user
only pays taxes when they receive the monthly payment (so taxes are spread over time)
and they only pay taxes on the portion of their payment attributable to tax qualified
This is different from a Deferred Annuity where you the purchaser pays in over time (or
one lump sum) and the money is invested by the insurance company until the stream of
payments starts at some point in the future.
Deferred Lifetime Annuity: A Deferred Lifetime Annuity is
an annuity in which the payments start at a predetermined future date. With a Deferred
Annuity the purchaser pays in over time (or one lump sum) and the money is invested by
the insurance company until the stream of payments starts at some point in the future.
A Deferred Annuity is most often used when you think there will be an income need in the
future, but not immediately -- if you have a job now, but forsee stopping work and still
needing the income at a later date. Or, if you think medical or long term care costs will
require additional income as you age.
Fixed Annuity: A fixed annuity pays a fixed rate of return
and is typically invested in lower risk fixed income products such as government securities
and corporate bonds. This is different from Variable annuities which typically invest in
riskier assets such as mutual funds that hold equities. Variable annuities can provide a
higher rate of return, but they have more risk and your monthly payment may fall as well.
Term Annuity: A term annuity is a financial product that
guarantees payment for a specific period of time such as 5, 10 or 20 years.
Joint Annuitant: A joint annuitant is typically the spouse
of the purchaser of an annuity (the annuitant) – very often retirees who want to secure
lifetime income will purchase an annuity which provides payments for as long as either
the annuitant or joint annuitant is alive.
Survivor Benefit: When people buy Joint & Survivor annuities
that make payments for as long as either annuitant is alive they can elect to change the
size of the payment to the surviving annuitant when one of them passes away. The survivor
benefit is typically 100%, 75%, 66% or 50% of the original payment amount – it depends on
what income amount the purchasers think will be necessary at that point in their lives.
Monthly Income: Enter the monthly amount you think you will
need from an annuity to cover a gap in your retirement income and the Annuity Calculator
will retrieve quotes for what it would cost to buy this level of monthly income.
Lump Sum: Enter the savings you have available that you could
convert to an annuity and the Annuity Calculator will tell you how much monthly income it
would produce for the rest of your life.
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