# Using Annuity Calculator

The term “annuity” refers to any financial agreement in which you agree to make periodic payments to the person or entity that pays your annuity as a regular income over a long period of time. This can be accomplished in one lump sum payment or through monthly payments over an extended period of time. Annuities have been popular with many people because their tax-free income allows them to save for retirement and other important expenses without paying taxes on the savings. This also has the advantage of not triggering any income tax until distribution and most annuities provide immediate tax relief upon sale of a covered annuity.

Annuity values are determined according to several different factors including the amount invested, number of years the contract is structured, interest rate, tenure, and date of purchase. Your annuity may also be affected by the type of contract – like a variable annuity where your payments are guaranteed on a certain amount of money, or a deferred annuity where your payments are applied from accumulated funds over a certain period of time. The present value of a annuity depends on several factors, including the amount of money to be paid and the expected rate of returns. The discount rate of return is a major part of the equation. An annuity s current payments are lower depending on the discount factor.

A person or entity can contribute to an annuity either by buying it from you or by paying it out within a period of time in return for a lump sum payment. Once the amount invested exceeds the total cost of paying the current value, you will then start receiving fixed payments based on your future value. You can also withdraw your payments at any point up to the remaining maturity date, but your earlier payments will be withdrawn first. The rate of interest on an annuity varies according to the contract, and it is based on a variety of factors such as the initial rate, current rates, and level term, maturity date, and per period interest rate.

How do you receive your periodic rent payments? With annuities, you receive cash payments (e.g., check, money order, etc.) either semi-annually, annually, or continuously according to the contract. You also get the convenience of having tax-deferred growth on your annuity. The tax deferred growth starts building as soon as you reach the annuity cap, and reaches its maximum at age 100.

On the other hand, when you use a deferred annuity, you get the flexibility of choosing your own rate of interests and additional payment amounts. You just have to make timely payments according to the schedule determined by the company. At any time, you can withdraw your monthly payments, but only after the remaining period has expired. As long as the present value is greater than the deferred future value, then you will receive more money than what you invested in the annuity.

Annuities are generally less risky than fixed rates, but they have their own benefits. With these benefits, you get more options when it comes to paying monthly premiums. In addition, you do not need to wait for the whole life of the annuity contract to reach its full maturity. Since a portion of your monthly payments go towards taxes, a good annuity calculator will help you determine if you can fully defer your taxes. It will also help you determine the amount of payments you would be receiving during the deferred period. With the help of a good annuity calculator, you can determine the future value of an annuity and choose the option that best suits your financial needs.