A useful tool for those thinking about getting an annuity – and even for those who already have one – is the annuity rate calculator. It is easy to find an annuity rate calculator online, where many financial and insurance websites provide one for free. An annuity rate calculator can be used to research and compare different kinds of annuities, as well as annuity products offered by different companies.
The Present Value Calculator
There are various types of annuity rate calculators, but the most useful is the present-value calculator. It is designed to help contract owners with their annuity investments. The concept of present value can be confusing. For the purposes of the calculator, the present value is the value, on a specific date, of an annuity payment or series of payments to be made in the future, which are “discounted” back in time to reflect the time value of money and factors like investment risk. An online present value calculator can be used any time an investor wants to calculate annuity payments. The different calculators have difference user interfaces, so look for one that is easy for you to use. To use an annuity rate calculator, an investor must have certain figures at the ready. These include the discount factor and the rate of return.
The Immediate Value Calculator
An immediate annuity calculator can help an investors determine the amount of the fixed payments they can expect to receive, over time, from an immediate annuity plan. With an immediate annuity, the investor pays a lump sum of money to an insurer in exchange for a guaranteed income stream. The immediate value calculator will determine monthly, quarterly, or annual payment amounts.
The Future Value Calculator
A future value calculator will help an investor determine the future value of an annuity. This kind of calculator uses the current balance in a fund, and the size and duration of payments made into the fund over the life of the contract. The calculator then converts the future value amount of the fund into annuity terms; generally, these terms are of 20, 25, or 30 years.
Final Thoughts
Annuity rate calculators are invaluable tools for financial planning, but the determination of an actual earnings rate is more complicated than using such a calculator. Investors must also consider any special offers made by insurers to get their business. All annuity plans are not the same, so it’s wise to learn as much as possible about the annuity products on the market, and then consult with a professional financial adviser. Sometimes it takes a professional to find just the right retirement annuity for an individual’s particular situation and investment goals.
For more information from Steven on how to invest in annuities and common investment mistakes, visit his
Annuities Investment Guide. To learn more about the differences between fixed and variable annuities, visit the
Fixed Annuities or
Variable Annuities Guides.
