Fidelity Annuity Calculator
About: This calculator helps estimate annuity income, growth, and values based on various annuity types and payment structures. Calculate potential retirement income from immediate or deferred annuities.
Planning for retirement can feel overwhelming, especially when considering how to generate a steady income that lasts a lifetime. An annuity is a popular solution that guarantees regular payments to help secure your financial future. To make retirement planning easier, the Fidelity Annuity Calculator provides an interactive tool to estimate annuity income, growth, and lifetime payouts based on your specific circumstances. Whether you are considering immediate annuities, deferred growth, or variable annuities, this calculator can give you a realistic projection of your retirement income.
What is a Fidelity Annuity?
An annuity is a financial product offered by insurance companies designed to provide a steady income stream, typically during retirement. Fidelity annuities come in several types:
- Immediate Annuity – Starts paying income shortly after a lump-sum investment.
- Deferred Annuity – Allows your investment to grow for several years before payouts begin.
- Variable Annuity – Income and growth depend on investment performance in selected funds.
- Fixed Indexed Annuity – Growth is linked to a market index while protecting your principal.
By understanding the type of annuity and associated growth and payout rates, retirees can plan for financial security in retirement.
How to Use the Fidelity Annuity Calculator
Using this tool is simple and user-friendly. Follow these steps:
1. Choose Your Annuity Type
Select the type of annuity you are considering—Immediate, Deferred, Variable, or Fixed Indexed. This determines whether your funds will grow before payouts and which calculation options are displayed.
2. Enter Initial Investment
Input the amount you plan to invest or pay as the annuity premium. This is the principal that will generate your future income.
3. Input Personal Information
Provide your current age. If using a deferred annuity, enter the number of years until payouts begin. This helps the calculator determine the growth during the accumulation phase.
4. Select Payment Period
Choose from:
- Lifetime Payments – Receive income for life.
- Period Certain – Guaranteed payments for a fixed number of years.
- Joint Life – Payments continue for you and a surviving partner.
If “Period Certain” is selected, you will also specify the number of guaranteed years.
5. Rate Information
- Expected Annual Growth Rate – The interest rate your investment may earn during deferral.
- Estimated Payout Rate – Percentage of your annuity value paid annually.
6. Additional Options
- Cost of Living Adjustment (COLA) – Adjust payouts for inflation, with options for 2%, 3%, or a custom percentage.
- Surrender Charge Period – Enter the number of years early withdrawals incur penalties.
7. Calculate Results
Click the Calculate button to see detailed results, including monthly and annual income, first-year payout, lifetime totals, breakeven point, and adjustments for COLA.
Understanding Your Results
After calculation, the tool provides several key insights:
Income Projections
- Monthly Payment – Expected monthly income.
- Annual Income – Yearly income from the annuity.
- First-Year Income – Income starting from your payout age.
Accumulation Phase
For deferred annuities, it shows:
- Value at Annuitization – Total annuity value after deferral.
- Growth During Deferral – Earnings accrued during the accumulation period.
Lifetime Totals
- Total Payments (20 or 30 years) – Projected income over selected periods.
- Breakeven Point – Years required to recover your initial investment.
COLA Adjustments
If inflation adjustments are applied, the tool estimates income in future years, such as Year 10 or Year 20.
Important Information
- Surrender Charge Period – Duration before early withdrawals are penalized.
- Payment Type – Confirms the chosen payout structure.
Example Calculation
Suppose you are 60 years old and plan to invest $100,000 in a deferred annuity for 5 years with a 5% growth rate, a 5% payout rate, and a 2% COLA.
After entering the data:
- Future value after 5 years: $127,628
- Monthly payment: $531.78
- First-year income: $6,381.50
- Breakeven point: ~20 years
- Year 10 income (with COLA): $7,778.00
- Year 20 income (with COLA): $9,466.00
This example demonstrates how the calculator accounts for growth, payouts, and inflation adjustments.
Benefits of Using the Fidelity Annuity Calculator
- Personalized Projections – Tailored to your age, investment, and annuity type.
- Quick and Easy – No manual calculations needed.
- Visualize Growth – See potential accumulation and payout figures.
- Plan for Inflation – Factor in COLA for long-term financial stability.
- Compare Scenarios – Evaluate immediate vs. deferred, fixed vs. variable annuities.
Tips for Accurate Calculations
- Ensure your initial investment and expected growth rate are realistic.
- Adjust COLA rates to account for expected inflation.
- Consider your life expectancy and joint-life needs.
- Review surrender periods to avoid penalties for early withdrawals.
- Consult a financial advisor for complex annuity products.
Frequently Asked Questions (FAQs)
- What is an annuity?
An annuity is a contract that provides a guaranteed income stream, often for retirement. - What’s the difference between immediate and deferred annuities?
Immediate annuities start paying income immediately, while deferred annuities grow your investment before payouts. - Can I adjust for inflation?
Yes, you can apply a COLA (Cost of Living Adjustment) to increase payments over time. - What is a variable annuity?
A variable annuity’s growth depends on the performance of selected investment funds. - How does a fixed indexed annuity work?
Its growth is linked to a market index, providing growth potential while protecting the principal. - What is a surrender charge?
A penalty applied for early withdrawals during the initial contract period. - Can I calculate joint-life annuities?
Yes, select the “Joint Life” payment option to account for a survivor benefit. - How do period-certain payments work?
Income is guaranteed for a fixed number of years, even if you pass away. - Is my initial investment guaranteed?
Generally, yes, depending on the annuity type, except for variable annuities. - How is the payout rate determined?
The payout rate is based on your investment value, age at annuitization, and annuity type. - Can I change COLA after purchase?
Typically, COLA rates are fixed in the contract; check your policy terms. - How long until I recoup my investment?
The breakeven point shows how many years it takes to recover your initial premium. - Does the calculator include taxes?
No, it provides gross projections; taxes will vary by jurisdiction. - What if I want higher payouts?
Consider higher initial investment, longer deferral period, or choosing a higher payout rate. - Should I consult a financial advisor?
Absolutely, especially for complex annuity options or large investments.
Using the Fidelity Annuity Calculator helps you make informed retirement decisions with realistic projections and comprehensive analysis of your income potential.