Full Annuity Lifecycle
Annual Projection Schedule
| Period | Phase | Start Balance | Contribution / Income | Interest | End Balance |
|---|
Tax-Deferred Growth
Annuities grow tax-deferred — you don't pay taxes on interest or gains until you begin taking withdrawals. This allows your money to compound on a larger base each year compared to a taxable account, accelerating the accumulation phase significantly over long time horizons.
The Annuitization Decision
When you "annuitize," you convert your accumulated balance into a structured stream of payments. This calculator computes the level payment amount that fully amortizes your balance over the payout period at the distribution return rate — similar to how a mortgage payment is structured, but in reverse.
Payout frequency (monthly vs. quarterly) affects the per-period amount but not the total significantly at typical rates.
Death Benefit & Beneficiaries
If your balance is not fully exhausted before the end of the projection period, the remaining value passes to your named beneficiaries — often income-tax-free depending on the contract. Many annuity contracts also include a guaranteed minimum death benefit equal to the greater of the account value or total premiums paid.
Types of Annuities
Fixed: A guaranteed rate from the insurer — predictable, low risk.
Variable: Returns tied to sub-accounts (mutual fund-like); more upside, more risk.
Fixed Indexed (FIA): Returns linked to a market index with a floor (often 0%) protecting against loss — a popular middle ground.
This calculator models a fixed or fixed-indexed accumulation phase with a specified distribution rate during payout.