Single Payment Immediate Annuity Calculator

This is one of the most frequently asked questions at our firm when one of our C-Suite is part of an Economic Exit or when a founder sells a company and is looking for a systematic way to create monthly income.

There are many ways to meet this goal, and tax liability is actually the first question we try to resolve before we get into how to make it work.

“It is easier to keep it, than it is to make it”

First lets level set! Call 912-ANNUITY to get the rate and calaulations you are wanting, and then we can get into maximizing the opportunity.

How does a Lump Sum Annuity Work?

A lump sum annuity is a financial product commonly used for retirement planning. Here’s an overview of how it works:

Definition

A lump sum annuity involves a single, large payment made by an individual to an insurance company in exchange for a steady stream of income for a specified period or for the remainder of the individual’s life.

How It Works

Initial Payment: The individual (annuitant) makes a one-time, large payment to the insurance company. This is known as the premium.
Accumulation Phase (Optional): In some cases, there might be a period where the funds accumulate interest before the payout phase begins. This phase is more common in deferred annuities.
Payout Phase: The insurance company starts making regular payments to the annuitant after a certain period or immediately, depending on the type of annuity. These payments can be monthly, quarterly, semi-annually, or annually.
Duration of Payments: The duration can vary. Some annuities offer payments for a fixed period (e.g., 10, 20 years), while others continue for the lifetime of the annuitant. There are also options where payments continue for the life of the annuitant and after his/her death, to a designated beneficiary.
Rate of Return and Payment Amount: The size of the payments depends on several factors, including the initial lump sum paid, the age and gender of the annuitant, the anticipated return on the investment, and the length of the payout period.

Types of Lump Sum Annuities

Immediate Annuities: Begin paying out almost immediately after the lump sum is paid.
Deferred Annuities: Begin paying out at a future date, allowing the investment to grow over time.

Advantages

Guaranteed Income: Provides a stable and predictable income stream.
Retirement Planning: Useful tool for retirement planning, ensuring financial stability in later years.
Tax Benefits: The investment grows tax-deferred until payouts begin.

Disadvantages

Inflation Risk: Fixed payments might lose purchasing power over time due to inflation.
Liquidity: Once invested, it’s difficult to access the lump sum without incurring penalties or fees.
Longevity Risk: For lifetime annuities, there is a risk of not receiving the full value of the annuity if the annuitant passes away early.

Suitability

Lump sum annuities are suitable for individuals who:

Seek a guaranteed income stream in retirement.
Want to manage the risk of outliving their assets.
Prefer stability over investment risk.

Conclusion

A lump sum annuity can be a valuable component of a retirement plan, offering financial security and peace of mind. However, it’s important to carefully consider individual needs, financial goals, and market conditions before investing, and consulting with a financial advisor is always recommended to make an informed decision give us a call 1-912-ANNUITY