An annuity calculator can help you determine the amount of your annuity if you are planning to sell it for a lump sum payment. Most annuities have fixed premiums that increase at a fixed rate and stay the same until they reach a certain point. If you want to sell before these fixed premium payments reach an amount that you can sell them for, you will have to figure out the present value of your annuity. This can be done with the aid of a life expectancy calculator.
How is the Present Value of an Annuity Calculated? Using a life expectancy calculator, you can determine how long you would live after receiving your annuity payments. The present value of an annuity depends on many factors including your age, health, and the amount of time you have left to complete your retirement. The more years you have until retirement, the higher your annuity payments will be. The lower your current health, the higher your payments will be.
How is the Present Value of an Annuity Used in a Lump Sum Offer? Most people who receive lump sum payments are interested in getting the most interest for their money. Many companies will purchase annuities with a view toward paying all or a part of a pension. The lump sum payment can be used as capital for investments. When using it as collateral for a loan, it increases the risk of lending to you, so it helps to build your credit history.
What is the Present Value of an Annuity in a Retirement Retention Situation? In a retirement situation, the annuitant’s remaining time income is usually equal to the present value of an annuity over the lifetime of the annuitant. This amount is figured by subtracting the present earnings amount from the expected retirement income to get the expected lifetime payout. The downside of this calculation is that it can be very difficult to get an accurate calculation. Because of this, some companies provide their clients with a Present Value of Annuity calculator, which they use to determine the present value. However, using this calculator is not the only consideration when choosing a retirement plan.
Most retirement plans today offer two guaranteed options: a deferred annuity payment and an indexed annuity payment. Deferred annuity payments are based on the overall investment return during the retiree’s remaining time span. The indexed annuity payment is designed to pay out a constant stream of interest, but the interest rate may change over the course of time.
Which is better? For most people, the answer will be a lump-sum payment. However, there are many situations where an annuity pays out less over time than a deferred annuity payment. In these cases, an aligned annuity may be the better option. By providing their clients with a Present Value of Annuity calculator, financial planners are able to determine whether an annuity provides a superior result to a lump-sum payment or if an aligned plan is preferable.