Questions tagged [annuity]
An annuity is a contract between you and an insurance company that requires the insurer to make payments to you, either immediately or in the future. You buy an annuity by making either a single payment or a series of payments. The payout may come either as one lump-sum payment or as a series of payments over time.
119
questions
6
votes
1
answer
160
views
Can you use a tax-free lump sum to buy a second annuity?
My mother and I were talking yesterday about how she should take her pension (she's retired a couple of years before legal retirement age, which she's now coming up to).
We've more or less decided ...
- 163
1
vote
1
answer
62
views
Calculating CAGR for Ordinary annuity
Basic compounding interest question:
I paid 5000 every month for 12 months and got 67500 in return, what was the annual compounding intereset rate?
I considered formular as follows:
FV = PMT(((1+r)^...
- 173
14
votes
4
answers
4k
views
Annuity money is not insured?
I am thinking of buying an annuity. I am worried about the following words on the contract. Is it the standard way of an annuity? If something goes wrong, will I lose ALL my money? I am in the USA.
...
- 421
0
votes
2
answers
217
views
Whether to obtain a 'retirement annuity'?
I'm in the US, I've been suggested obtaining a retirement annuity.
For example, putting $100k and waiting 2 years gives about $8300 annually for my lifetime.
Are there any good reasons NOT to do this?...
- 109
9
votes
3
answers
2k
views
Second opinion on investments
I'm working with a finance professional to receive guidance on investing and retirement planning for down the road. We like the individual that we are working with but he/she is compensated via sales/...
- 341
2
votes
0
answers
35
views
The formula for a decreasing annuity (discounted by an interest rate) term life insurance?
Sometime when you are getting a quote for a term life insurance, they offer you 3 options:
For a period T, and amount insured A.
Fixed (payout is always A in the entire period T)
Linear desceding (...
- 121
1
vote
0
answers
33
views
How do I compare yields on an annuity?
I want to compare two financial products, but run the same time and get invested in the same amounts. Taxes etc are assumed to be the same for both.
Product A: pays a livelong annuity after x years.
...
- 43
0
votes
0
answers
30
views
What does it mean for an annuity to "accept funds" from SEP IRAs?
I am not sure what it means for an annuity to "accept funds" from SEP IRAs. Does it mean that the purchase of an annuity using funds in a SEP IRA does not constitute a withdrawal of funds ...
- 115
0
votes
0
answers
36
views
Taxation on Fixed Annuities?
I was currently looking at investing into annuities, specifically through the current Canvas offer of 4.3% for 3 years (https://www.annuityexpertadvice.com/annuity-rates/). In signing up I was ...
- 123
-1
votes
1
answer
98
views
amount of an annuity
having a compound capitalization scheme with a capitalization time of one year and interest rate= r, considering V_8 the amount of an 8 years periodical annuity (perido=1 year), immediate postponed ...
- 11
3
votes
2
answers
508
views
Is there any advantage to buying an annuity through a bank?
I was talking to someone recently who told me they bought an annuity through their bank. Is there any advantage to buying one through a bank over buying one directly from an insurance company?
- 1,655
0
votes
1
answer
116
views
IRS 10% penalty on gains from an annuity
I consider myself a reasonably proficient investor but annuities are new to me.
For my short-term cash needs, I've been CD laddering.
As I look to invest for 2026 maturity (5 year), CDs are returning ...
- 173
4
votes
3
answers
2k
views
Finance Test: How to solve for interest rate? (Annuities)
Hello thanks for helping me!
Here's the problem:
You are told that if you invest $11,000 per year for 23 years (all payments made at the end of each year), you will have accumulated $366,000 at the ...
- 69
0
votes
1
answer
72
views
Future value of an annuity with variable compounding time?
I haven't found any information on this so here goes: Is there any general formula for calculating future value of an annuity (recurring deposit) when the interval of interest compounding is variable? ...
- 1
0
votes
1
answer
100
views
What is the difference between a deferred annuity and an endowment policy?
This is a follow up question on Financial product where the investor makes regular contributions and receives a lump sum. "Deferred annuity" and "endowment policy" are the ...
- 16.8k
2
votes
4
answers
143
views
Should I separate a portion of my 401k into an annuity?
Bank financial planner thinks I have too much (dollar wise) in mutual funds in my 401k.
I am 12 years from retirement.
They suggest taking a portion of that and opening an annuity for some protection ...
- 395
2
votes
1
answer
32
views
How to calculate perpetuity when interest calculation interval is different from the cashflow interval
I’m trying to calculate the present value of an investment scheme I was suggested with.
The scheme is, I have to invest say $100 in every quarter perpetually. Now I know how to calculate it (the ...
- 121
3
votes
2
answers
128
views
How are annuity rates calculated for money purchase/DC pensions?
I have two pension schemes from two different UK major providers, and they are presumably using whatever the legal requirements are for calculating projected annuity for my pot, but to me they seem ...
- 150
3
votes
3
answers
176
views
Can I get life insurance for myself that automatically converts to an inflation-adjusted life annuity for my wife if I die?
I'm 27 and my wife is 23. She stays at home and I'm the breadwinner. If I die, I would like her to get fixed, inflation-adjusted payments until she dies.
According to the National Endowment for ...
- 1,520
1
vote
1
answer
92
views
How to calculate effective rate of return for annuity payments and annuity receipts?
There is an annuity annual payment of 100000 from year(s) 1-7. After these payments, there are annuity annual receipts of 153127 from year(s) 8-15. I want to know what is the effective return on this ...
5
votes
1
answer
262
views
Is there a financial product similar to an annuity in Germany?
I'm trying to figure out how to buy an annuity in Germany. Specifically, I'm interested in a fixed immediate life annuity. That is, a product that would offer a fixed payout every month for the ...
- 171
1
vote
1
answer
128
views
How would the financial situation be, if a person not only lives quite long, but also has Alzheimer's disease?
If we live to 85, and set aside some money to live to 85, that's all good. But what might worry us, is what if we live to 95 or 105, and therefore need more money to live on, and also, with things ...
- 111
2
votes
1
answer
209
views
What happens to annuities in a long bear market?
Annuities are insurance contracts which establish regular payments to an individual by the insurance company, typically lasting until said individual's end of life.
Usually, the individual gives the ...
- 464
1
vote
3
answers
141
views
Present value of perpetual GROWING periodic payments
There are multiple sites that post a formula for the present value (PV) of a perpetual EQUAL periodic payment:
PV = a / ((1 + i)^t - 1)
where a (in $) is the value of the periodic payment, and t (in ...
- 11
0
votes
1
answer
71
views
How to quantify the effect of compounding interval on total interest accrued
I am struggling with calculating the total interest to be paid on a loan, when given Principal, APR, Compounds per Year, and term.
Mostly, I get confused when the term is not the same unit as the ...
- 1
1
vote
1
answer
63
views
Finding the future value when investing a single sum and then an annuity
If I invest amount A today for N years and then invest amount B every year for the same N years (as an ordinary annuity), then to find the future value at the end of N years should I treat the first ...
- 11
41
votes
10
answers
15k
views
Why would a life-insurance company agree to a 20-year guaranteed life annuity which is expected to pay out more than the principal?
I'm working through a paper on lifetime annuties, and in the paper, the following example is presented:
With an initial purchase of $100,000, and a guarantee period of 20 years, an 80 year-old female ...
- 411
3
votes
2
answers
238
views
Calculating Annuities With Different Compounding period and Interest Period
Can anyone Help me solve this?
In July 2010, Mike deposits $100 semiannually into an account compounding quarterly at 7% nominal annual interest for three years.
In July 2013, he increases the ...
- 31
0
votes
0
answers
57
views
One RA vs multiple RA's (investments in general as well)
I am young and trying to work out how I want to get a retirement annuity sorted. My question is, is it better to put 9 in to one RA, or 3 3 3 in to 3 different RA's? (here I just use the numbers to ...
- 901
2
votes
2
answers
77
views
Profitability of Holding a Loan from Issue to Maturity
The loans that I invest in pay a fixed amount of money per month. A portion of it is principal and another portion of it is interest. As the loan matures, a smaller proportion of each payment is ...
- 155
1
vote
0
answers
51
views
RMD after annuitizing an annuity in a traditional IRA
I live in the United States and I have an annuity that hasn't been annuitized in a traditional IRA account (IRA A).
I need to take a required minimum distribution (RMD) of $8K this year for IRA A.
I ...
- 111
1
vote
0
answers
39
views
Annuity with deposits solved for number of periods given total value
Hi can someone help me solve for t in the equation below?
total = p (i +1) + d * (1+i)t-1 / i * (1 + i)
Trying to figure out the formula for "how long will it take me to save X if I have Y to start ...
- 11
-3
votes
1
answer
178
views
Variable Annuity - I want out, yes or no? [closed]
My sister bought a large annuity for me right after my husband passed away without my approval but now I am stuck! She no longer manages my money either and we don't talk because she really took ...
- 1
3
votes
2
answers
333
views
Understanding annuities with respect to Term Life insurance
I am financially well to do. I have Term Life insurance (along with high 6 digits in savings) that will protect my kids. I am considering protecting myself and guarding against outliving my assets ...
- 1,237
2
votes
1
answer
86
views
Annuity vs Bond Returns
The way I understand it buying a simple term annuity from an insurance company is like depositing money in a account that earns fixed interest compounded for the duration of the annuity and taking out ...
- 271
1
vote
2
answers
380
views
How do you calculate the rate in the present value of an annuity due calculation?
I have the formula for calculating the present value of an annuity due
I have the Present value now, so I want to solve for r. In other words, I would like to find out the resultant rate.
In the ...
- 115
-1
votes
1
answer
120
views
Future Value of Annuity Due with Different Percent Rate
Basically I understand how to solve a FVA problem if its just one static interests rate (%) and this is the Formula I use.
But this table from Bank's Rate Table is confusing me on how to calculate ...
- 1
0
votes
1
answer
150
views
AIG Single Premium Deferred Fixed Annuity
I would very much appreciate if someone could explain the "investment" benefits of a Single Premium Deferred Fixed Annuity. I know NOTHING about this type of investment plan, which my financial ...
- 3
1
vote
1
answer
980
views
Minimum Required Nest Egg Formula?
As a follow-up to this question, what is the minimum size of a nest egg to support 30 years of $5,583.33 monthly distributions? I want the $5,583.33 to increase with inflation each month.
The ...
- 218
3
votes
4
answers
2k
views
What is the meaning of the Mega-Million's Cash Option - Avoiding lottery's winning taxes
The current Mega Millions jackpot is standing on $868 Million USD, while the Cash Option for the same Jackpot is $494 Million USD.
The winner of any of Mega Million's jackpot has two options to ...
- 734
2
votes
2
answers
220
views
How can I predict future value of annuity given historical data points and using regression?
I have a retirement fund into which I make regular deposits, however the deposits vary to some extent in size. Furthermore, the growth of the account is also dependent on stock prices. I am tracking a ...
- 21
1
vote
3
answers
750
views
Growing annuity where cash flow grows per second year
I'd like help with a formula for calculating Future Value given the following:
An amount is invested at the END of every year, starting with amount of PMT at the end of this year, at an interest rate ...
- 13
3
votes
1
answer
292
views
88 year old mother considering Fidelity & Guaranty Life FG Guarantee-Platinum 7 annuity (being pressured into)
My 88 year old mother is considering buying an annuity FG Guarantee-Platinum 7, single premium, fixed, deferred with 7 year guarantee of 4%.
I was always under the impression that annuities of any ...
- 31
4
votes
1
answer
3k
views
Defined Benefit Lump Sum calculation
I have a Defined Benefit Pension Plan. I know how to calculate my monthly annuity (single life annuity), but can't figure out how the Lump Sum is calculated from the monthly annuity.
I have been ...
- 41
4
votes
1
answer
187
views
Should I withdraw from my annuity now to invest elsewhere?
~8 years ago, when I was in my mid 20's, I wanted to start investing but had no clue what route to take. I researched a little and decided a Roth IRA would be the best place to start. A friend's uncle ...
- 143
4
votes
3
answers
883
views
Young w/ pension plan: lump sum or annuity?
I've become fully vested in my company's pension plan, and I intend to quit in the near future to pursue other career options. It seems the pension scheme allows me to decide what to do with the ...
- 159
1
vote
2
answers
215
views
Is this mixed annuity (part savings and part mutual fund) legitimate?
I heard about a type of annuity where some money is invested (I believe into the S&P 500) and other money is put into something like a CD. The contributor controls how much goes into the mutual ...
- 319
1
vote
0
answers
367
views
Limits on Canadian gifting $400,000 to a friend in US
Friend recently passed leaving all her annuities to 91 yr. old sister in Canada who is very wealthy and does not need the money. The Canadian relatives who have power of attorney for the sister want ...
- 11
2
votes
1
answer
127
views
Rollover of 401k funds into an IRA
I am a 65 year old NON-US citizen, with an existing 401k based in the US. I am wanting to draw a monthly income from my "pot".
Purchasing an annuity from insurance companies does not seem likely to ...
5
votes
2
answers
144
views
Valuing a public sector pension
A common public sector pension structure in the UK is as follows
You receive a payment each year from your pensionable age until you die.
If you die before your partner, they receive a survivor ...
- 329