5 Criteria that Impact your Annuity Withdrawal Calculator Estimates

There are several criteria that impact your annuity withdrawal calculator estimates. Calculating annuity payments and withdrawals is often complex, since insurance providers set the rates and contract terms. To get the most accurate estimates, annuitants need to understand the type of annuity that best fits their need and its average rates. As a financial professional, consider additional variables such as annuity phase, surrender period length, and more to ensure accurate calculator estimates. Read on to discover five criteria that impact your annuity calculator withdrawal estimates.

Annuity Phase

The current phase of your annuity is one criteria that impacts withdrawal calculator estimates. There are three phases in an annuity’s life cycle: accumulation, annuitization, and payout. The accumulation phase is when the annuity builds up monetary value, through either an lump sum or series of payments on your part. Next is the annuitization phase, which is more of a single event that separates the accumulation and payout phases. It represents the moment in which the insurance provider stops receiving payments, sometime through a safe check payment system,  and prepares to disperse them. The payout phase is when payments are distributed back to the investor. If your annuity is non-qualified, portions of your payments will either be taxable or tax-free. Surely, the current phase of your annuity affects many tax-related variables in withdrawal calculations.

Type Of Annuity

The type of annuity involved also impacts your calculator estimates. There are several types that heavily differ in contract rates and terms. Generally, annuities are divided into two main categories: term and lifetime. Term annuities guarantee payment for a predetermined amount of time, such as five, ten, or twenty years. Lifetime annuities guarantee payment for the rest of the annuitant’s life. Additionally, the rates on these annuities can be either fixed or variable. Absolutely, the type of annuity impacts calculator estimates by determining the variables involved in the calculations.

Expected Rates Of Return

Another criteria affecting your annuity withdrawal calculator estimates is your expected rates of return on a variable annuity. Many calculators assume your returns are compounded annually and that contributions are made at the start of each year. However, your actual rate of return depends on your selected investments. As you learn how to daytrade, remember that upcoming return rates can’t be predicted with certainty, since investments carry an inherent risk and volatility. Therefore, their actual rates of return can vary widely. Additionally, insurance providers may include extra fees such as administrative and expense risk charges that affect your rates of return. Certainly, expected rates of return are one of the principal values when calculating annuity withdrawals.

Joints & Survivors

Joint & survivor clauses on your annuity contracts often impact withdrawal estimates. With a joint and survivor annuity, you and your joint annuitant (usually your spouse) receive monthly payments, and they will continue after one of you passes away. However, there’s a trade-off in that the payment rates are often lower than single-life annuities, since they’re being split between two people. Additionally, the benefits received after one annuitant’s death may be less than when both annuitants were alive. Definitely, joint and survivor status affects the rates you can plug into a withdrawal calculator.

Surrender Periods

Surrender periods are one criteria that often impacts your annuity withdrawal calculator estimates. When withdrawing from an annuity, you might be subject to a withdrawal, or surrender, fee. These charges are included to offset insurance company losses when annuitants withdraw before interest can be earned on the principal. As the annuity matures, these fees become smaller and smaller until the surrender period expires, and there’s no fee for withdrawals. Most insurance provides allow annuitants to withdraw up to ten percent of the account’s value without incurring the fee, but withdrawing more than your contract allows often incurs fees, even after the end of the surrender period. Of course, surrender periods incur fees to cover insurance company losses, significantly impacting annuity withdrawal calculator estimates.

There is a myriad of criteria that impacts your annuity withdrawal calculator estimates. For example, your annuity’s current phase often has tax implications that affect calculation variables. Your annuity’s type also significantly affects these variables. Expected rates of return are one of the crucial values for you to enter into the withdrawal calculator. The presence of joint loans or survivor annuities tends to impact return rates, as well. Finally, surrender period lengths incur fees to cover the insurance company’s losses, which significantly affects calculator estimates. When wondering about criteria that impacts annuity withdrawal calculator estimates, consider the criteria described above.

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