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Contributing to an Equity Indexed Annuity creates long term tax deferred growth.
Use this calculator to see how an Equity Indexed Annuity might fit into your retirement plan.
Definitions
- Equity Indexed Annuity
- An Equity Indexed Annuity is an investment product designed to provide long term, tax deferred savings. You do not receive a tax deduction on the money you deposit, however you pay no taxes on any interest earned until you begin making withdrawals. Unlike IRAs (both Roth and Traditional IRAs) there are no annual contribution limits or income limits. An Equity Indexed Annuity is also a good option if you have already contributed the maximum amount to your IRA and wish to increase your tax deferred savings. This calculator assumes that you make your contribution at the beginning of each year.
- Surrender charges
- Press the "Enter Data" button to input surrender charges for this Equity Indexed Annuity. You are allowed to enter the year and percent of the surrender charge. Surrender charges are a percent of the annuity balance you will be charged if you withdraw your annuity balance early. The actual surrender charges vary widely from annuity to annuity. Make sure to check with your investment advisor if you are unsure of the surrender charges that may apply to your particular annuity.
- Current age
- Your current age.
- Age of retirement
- Age you wish to retire. This calculator assumes that the year you retire, you do not make any contributions to your annuity. So if you retire at age 65, your last contribution happened when you were actually age 64.
- Annual contribution
- The amount you will contribute to your Equity Indexed Annuity each year.
- Expected rate of return
- The annual rate of return you expect for your Equity Indexed Annuity. This calculator assumes that your return is compounded annually and your contributions are made at the beginning of each year. The actual rate of return is largely dependant on the type of investments you select. From January 1970 to December 2003, the average compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 11.7% per year. During this period, the highest 12-month return was 64%, and the lowest was -39%. Savings accounts at a bank pay as little as 1% or less. It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment.
- Current tax rate
- Your current marginal tax rate you expect to pay on your taxable investments.
- Retirement tax rate
- The marginal tax rate you expect to pay on your investments at retirement.
- Years until retirement
- Number of years before retirement.
- Annuity total before taxes
- Total value of your Equity Indexed Annuity at retirement before taxes.
- Annuity total after taxes
- Total value of your Equity Indexed Annuity at retirement after taxes are paid.
- Total taxable account
- Total value of your savings, at retirement, if your annual contribution is deposited into a taxable account.
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