# Annuity Calculator

Enter the total financial value of your asset and it’s yearly return on investment in percent to calculate the annual, monthly, and weekly annuity of that asset.

## Defining an annuity and its calculation

You might have paid or received a regular number of fixed installments over a period in your life. That may be specifically occurred to you at the beginning or at the end of a certain period of time. These are called annuities which can be done yearly, semi-annually, quarterly, and even monthly. Annuities help in understanding the value of money by calculating its present and future values. Below are the two basic types of annuities:

Annuity, where payments are usually done at the end of each schedule or month, is named as the ordinary annuity.

In the case of an annuity due, the payment schedules are meet at the very beginning of each period or month.

Market conditions are of great importance for the retirement fund and other business units. These uncertain market opportunities are one of the factors influencing annuities for a period of time. An annuity calculator is a specialized method developed to estimate the degree of an unpredictable future. This calculator is designed so as to guide the investors with an estimated rate of return. By this, they are able to make their decision on investments considering the accumulation period of the pension plan. Pension plans and funds are the ones who are mostly involved with using the payout of an annuity. Hence, it is also known as a retirement planning and pension calculator among various business units. An investor expects a quality return at the time of retirement. Calculating the appropriate rate of savings depends on various key factors. These inputs are explained down:

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## Maintaining statistics:

Calculation the estimated returns need to capture the basic statistics information from the investors. The current and expected retirement age of the investors are the key data points that determine the accrual phase of the annuity plan. The investment period depends upon the span by with the investor begins to invest. The investors are likely to taste a potential increase in the payout during their retirement with maximum benefits.

## Current income details

In order to ensure accuracy in the retirement corpus calculation, one needs to put a piece of complete information that involves the current annual income of the investor. The calculator can then determine a realistic rate of savings target for the present and future as it is directly related to the current income of the investor. The expected rate of income growth of an individual increase as they grow in terms of experience. This is also an important key factor to be considered for calculating the rate of savings.

## Currently available savings of the investor:

The current saving options of an investor is an important factor for calculating the future value of an adequate retirement corpus. The early the investors start to involve in investments plans the more they will be able to generate the expected rate of the annuity. It is very essential for the investors to calculate their saving depending upon their needs. They need to consider the risk factors that affect the rate of returns on savings. Different modes of savings involve relatively different risk factors hence, savings should be kept as per the required expenses.

## Expenses of an individual:

The earning factors on an investor are not just the only thing that effects the saving of an individual. Savings are rather directly dependent upon his or her day to day expenses. In cases of lower spending, one can easily increase their savings, whereas it has an opposite effect on savings with higher expenses of an individual. However, the expenses of an individual are effects with the inflation rates in the future

## Future inflation rates:

The rate of inflation tends to an increase in the expenses of an individual in the future which also have a drastic effect on the rate of returns. The investors are often needed to increase their savings when adjusted with a higher rate of inflation. This, in turn, helps them to meet their future retirement savings target as a lower rate would decrease the savings.

## Determining the rate of returns on investments:

Investments can be simply determined in two categories. A fixed rate of return on investments involves a constant and fixed rate of returns. Whereas in case of a variable rate of returns the market conditions offer a fluctuating return on the investments. One can obtain a high rate of savings with a higher rate of returns on their investments which would ease up the savings required to reach the retirement corpus during the accumulation phase.

## Outcomes of the annuity calculator:

The retirement results can be easily calculated with the above information. The investors will be able to track their retirement corpus that determines the amount one would need to maintain their current expenses in the future after calculating the rate of inflation. The future value of the investments is decided on the basis of the current investments which grows with the expected ROI. The future value of current savings and the total retirement corpus affects the required savings the investor needs to accumulate.

## Different means of calculating an annuity:

Annuities provide different ways of payments ensuring equality in the nominal value of the amount. This maintains a balance between the different rate of interests and principals in comparison to the present value of the payments. Here are the different types of payments schedule options: Converting lump sums into equal payments:Annuities are effective in comparing the present value of the lump sum payments with the cash flow

installments in the future. This calculation is beneficial in various conditions where the disbursements have to be done urgently and the returns are received in equal divisions.

## Converting payments into lump sums equal annuity

The annual payments can be calculated and converted into a lump sum amount. One can choose to make equal payments for the future installments at equal intervals that will be eventually converted into a lump sum present value. This value of money adds up to the total amount paid. The calculations help in computing the total amount to be paid to the lender if one chooses to close the loan with early payments.

## Calculating partial Lump Sums

Unlike the other cases, the annuity payments can be calculated into equal installments and partially paid in a lump sum. The payments options can be delivered partially and the balance can be converted into an annuity.