Annuity Calculators and Retirement Planning

Annuity Calculators and Retirement PlanningBy Tristan Ellis, Staff Writer

Deciding how best to use your available retirement funds can be a big decision - for many people it becomes the biggest decision of their lives. In order for the retirement plan to make sense, several factors should be considered.

An annuity calculator can assist in decision-making, calculating the present value of an annuity as well as calculating the future value of the annuity. Since the future is always uncertain, being prepared in the present allows you to adjust your assets and goals.

If safety and security is a consideration in your planning, you should consider using an annuity as your retirement vehicle. Annuities are very flexible and an annuity can provide an income for any time period, even a lifetime. Calculating how much retirement benefit you could receive from your available assets is based on specific information.

• Your available funds
• Your age (and your spouse's age if included)
• The time period the benefit needs to be used (lifetime, 10 years, etc.)

Annuity Calculator Terms

• Present value annuity calculator: The amount of money you have available.
• Future value annuity calculator: The estimated value of your investment in the future (years).
• Term calculator: How long do you want the benefit to pay?
• Interest rate estimator: The range of estimated interest assumptions (3%, 5%, etc.).
• Spousal benefit: Is a spouse or other person to be considered in the present calculation? If the calculation involves more than one life, the amount available to invest needs to be calculated for both lives.

The Factors to Calculate Annuities

When calculating income for retirement, several factors should be considered in addition to calculating present and future annuity value. These factors can include inflation, economic conditions, unexpected expenses such as medical and emergency needs and any possible change in marital or family status.

While it is impossible to foresee in the present all possible future issues, it is possible to provide some level of guarantees for future income and retirement planning. Annuity calculators provide the ability to calculate the future value or present value of your annuity and plan for your retirement.

Finding answers to retirement planning questions is never easy, but being able to establish minimum guarantees by calculating an annuity will help you evaluate present and future value as well as other possible assets such as Social Security or company pension.