Annuity Calculator

What is an Annuity Calculator?

An annuity calculator is a tool that helps you estimate the payouts or investments needed for an annuity.

An annuity is a financial product that provides a series of payments at regular intervals, typically monthly, quarterly, semi-annually, or annually, for a predetermined period or for the rest of the annuitant's life.

The annuity calculator typically requires inputs such as: 

• Initial investment amount

• Rate of return

• Frequency of payments

• Duration of the annuity

Results of Annuity Calculator

The annuity calculator helps to compute the income from investments in a specific period. By providing the above-mentioned information, the investors can calculate the retirement result, which includes:

• Total retirement amount

• Future value of savings available

• Additional savings that are required

• Number of years your investment will generate payment at a specified return

• A lump sum investment amount is needed to generate the desired monthly income

How Does an Annuity Calculator Work?

An annuity calculator uses the following formula to calculate the Future Value (FV) of your annuity plan:

Steps to Use an Annuity Calculator

Step 1- Find the Calculator: Search for "Annuity Calculator" on the Policybazaar website.

Step 2- Input Your Details: Enter the following information in the annuity deposit calculator: 

• Age

• Investment amount (for immediate annuities)

• Monthly investment amount (other annuities)

• Expected Rate of Return 

• Percentage of corpus allocated for pension

• Expected return from pension

Step 4- Calculate: Click the "calculate" button to see the estimated annuity payout.

IMPORTANT NOTE: Take a close look at the results provided by the Policybazaar Annuity Plan Calculator. Consider how they align with your financial goals and retirement plans. You may want to compare the results with different scenarios by adjusting the inputs.

Benefits of Annuity Calculator

An annuity calculator can be a valuable tool for retirement planning, offering several benefits:

• Clarity: It helps you understand how much income you can expect from an annuity plan based on your investment and other factors.

• Planning: It aids in financial planning by allowing you to experiment with different scenarios to see how they affect your future income.

• Comparison: You can compare different annuity plan options to choose the one that best fits your needs and goals.

• Time-saving: It saves time by quickly calculating complex annuity figures, which would otherwise require manual calculations.

• Accuracy: The annuity calculator provides accurate estimates, ensuring you make informed decisions about your best annuity plans and retirement finances.

• Empowerment: Using an annuity calculator empowers you to take control of your financial future by understanding the implications of various investment choices.

Taxation of Annuity

As annuities are specifically designed to provide regular pension income to individuals after retirement, it is taxable as per different slabs governed by the existing rules of taxation. 

1. Tax-Deferred Growth:

   • Contributions you make towards the annuity plan are not taxed currently. This allows your money to grow within the plan without immediate tax implications.

2. Tax Benefits During Contribution:

   • Contributions towards annuity plans qualify for tax deductions under sections 80C, 80CCC, and 80CCD of the Income Tax Act, 1961.

   • This allows you to reduce your taxable income and potentially save on taxes.

   • There is a maximum limit on this deduction (currently Rs. 1.5 lakh annually).

3. Taxation of Annuity Payments:

   • When you start receiving payouts from the annuity, those payments are generally considered taxable income.

   • The tax rate depends on your total taxable income and the prevailing tax slabs in your country.