Fixed Annuity Calculator
A Fixed Annuity can provide a very secure, tax deferred investment. It provides a guaranteed minimum interest rate, with no taxes due on any earnings until they are withdrawn from the account.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.
Definitions
- Fixed Annuity
- A fixed annuity is an investment product designed to provide long term, tax deferred savings. You do not receive a tax deduction on the money you deposit, however you pay no taxes on any interest earned until you begin making withdrawals. Unlike IRAs (both Roth and Traditional IRAs) there are no annual contribution limits or income limits. A Fixed Annuity could also a good option if you have already contributed the maximum amount to your IRA and wish to increase your tax deferred savings. Unlike a Variable Annuity that has no guaranteed rates of return, a Fixed Annuity will provide a guaranteed minimum rate of return. A Fixed Annuity, however, will have fewer investment options.
- 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
- Press the "Enter Data" button to input surrender charges for this Annuity. You are allowed to enter the year and percent of the surrender charge. 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 advisor 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.
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