Variable Annuity Calculator
Use this variable annuity calculator to see how a Variable Annuity might fit into your retirement plan. Contributing to a Variable Annuity creates long term tax-deferred growth.
View all our annuity calculators, or read on for a description of how this variable annuity calculator works.
While we don’t sell variable annuities, this website would not be complete without some information on how variable annuities work and their pros and cons. While variable annuities do make up the majority of annual annuity sales, we use safer, more guaranteed methods of creating stable retirement income. It you have a question about an existing variable annuity or want to consider other alternatives such as Secondary Market Annuities or Hybrid Annuities, please Contact Us.
Variable Annuity Calculator: Definitions
A variable annuity is an insurance 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 until you begin making withdrawals. There are no annual contribution limits or income limits. A Variable Annuity could be a good option if you wish to increase your tax-deferred savings. This calculator assumes that you make your contribution at the beginning of each year.
Variable 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 variable annuity, make sure you fully understand all options, restrictions and expenses for your specific variable annuity before you enter into such a contract. This variable annuity 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 variable annuity.
Press the “Enter Data” button to input surrender charges for this Variable Annuity calculator. 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.
Your current age. Enter into the variable annuity calculator.
Age you wish to start taking money out of the annuity. This calculator assumes that the year you begin withdrawals, you do not make any contributions to your annuity. So if you begin at age 65, your last contribution would have happened when you were actually age 64. Enter into the variable annuity calculator.
The amount you will contribute to your variable annuity each year. Enter into the variable annuity calculator.
Expected rate of return
The annual rate of return you expect for your variable annuity. This calculator assumes that your return is compounded annually and your contributions are made at the beginning of each year. The actual rate of return is largely dependent on the type of investments you select. For example, from December 2000 to December 2010, the annual compounded rate of return for the S&P 500 was 0.899%, including reinvestment of dividends. From January 1970 to December 2010, the average annual compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 10.05% (source: www.standardandpoors.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a bank may pay as little as 1% or less but carry significantly lower risk of loss of principal balances.
It is important to remember that these scenarios are hypothetical and that future rates of return can’t be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that funds and/or investment companies may charge.
Insurance products may additionally include mortality, expense risk charges, cost of insurance, administrative, and surrender charges that will have a significant impact on the total rate of return for the investment. Enter into the variable annuity calculator.
Current tax rate
Your current marginal tax rate you expect to pay on your taxable investments. Enter into the variable annuity calculator.
Retirement tax rate
The marginal tax rate you expect to pay on your investments at retirement. Enter into the variable annuity calculator.
Years until retirement
Number of years before retirement. Enter into the variable annuity calculator.
Annuity total before taxes
Total value of your variable annuity at retirement before taxes. Enter into the variable annuity calculator.
Annuity total after taxes
Total value of your variable annuity at retirement after taxes are paid. Enter into the variable annuity calculator.
Total taxable account
Total value of your savings, at retirement, if your annual contribution is deposited into a taxable account. Enter into the variable annuity calculator.
Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.