Several consumers are now looking toward annuities to help them sustain their current lifestyle during their retirement years. Annuities, in their varied types, seem to work very well for most consumer and retirees. However, many consumers who have invested in annuities, or are planning to do so, can only budget for the future once they know what their Annuity Income will amount to on a regular basis. There are a number of calculators online that can help consumers to calculate their annuity income. There is also a series of 5 easy tips that every consumer can perform to determine the amount of their annuity income:
1. Determine the type of annuity. Annuities can come either variable or fixed. A fixed annuity will have a guaranteed payout. However, the income determined by a variable annuity will depend very substantially upon the performance of the applicable investment. The annuity could also be deferred or immediate. A deferred annuity means that payments have been postponed until a designated point in time. An immediate annuity doles out payments as soon as the consumer has made their very first contribution.
2. Choose the payout option. For most consumers, the standard payout option is the full amount of annuity over a designated period of time, with any leftover balance being paid out to a beneficiary. However, there are several other payout options available with most annuities. They can be paid out to the annuity owner or the owner and their spouse. There are also payout options that can combine two or more versions of different payout options.
3. Determine other details. There are other details of the annuity that may impact payout. These include such things as interest rate and principal balance. Knowing these details can help determine the annuity income received.
4. Calculate payment amounts. The manual formula for determining the payment amounts is as follows:
Annuity Value = Payment Amount x Present Value of an Annuity Factor (PVOA)
5. Make Adjustments. If the annuity is not scheduled to be paid out right away, adjustments will have to be made in calculating the annuity income. The interest rate will accrue on the annuity between now and the first payment and the number of years until the consumer begins receiving payments.
Using these five simple steps can help determine exactly what annuity income can be expected. There are a variety of annuity calculators also online but manually, these steps seem to produce the easiest and most efficient way of determining expected annuity income.