Aug

17

What is a Pension Annuity Calculator?

Posted In: Investing Tips

Put simply an annuity calculator provides guidance for those who are looking to purchase an annuity. By entering a few personal details into the annuity calculator, you can generate annuity quotes from a selection of annuity providers. Some of the details you will have to input include, age, gender, fund size, single or joint-life annuity, escalations and any health impairments. It must be noted however that these results act only as a guide and are not precise annuity quotations. For these you must speak to an annuity provider or financial adviser who can then go through a formal, comprehensive annuity quote.

Below we examine how the following information impacts on the rates offered from an annuity calculator…

Age

How old you are will impact on how much money you will receive from an annuity. Not all annuities are bought at the start of retirement as some people choose to defer an annuity purchase. Taking a woman as an example, the annuity rates she is offered at 60 will be different to the rates offered at 70 as the insurer is likely to have to pay out for a shorter period of time.

Gender

Women on average live longer than men, fact. Thus women are offered lower annuity rates than men as a consequence. This is reflected in the results displayed from the calculator.

Fund Size

The bigger your pension fund, the more you can receive in annual retirement income. Your initial lump-sum payment (up to 25%) will also be bigger the larger your pension pot.

Single / Joint -Life

If you want to pass on some, or all, of your annuity payments when you pass away then choose a joint-life annuity. These however will often mean lower annual payments.

Escalations

You can also build in escalations based on a set percentage or alternatively you can link your pension to the RPI (Retail Price Index).

Health

If you have any health impairments or lifestyle choices which will impact on your life expectancy then the calculator may offer improved annuity rates. Typically someone who smokes heavily or drinks alcohol on a regular basis will be offered higher rates.

Remember, the annuity quotes generated from an online calculator are only designed to offer guidance, so make sure you speak to a professional before you buy your annuity.

Article Source: What is a Pension Annuity Calculator?