Percentage of accumulated value paid out annually.
Projection Summary
Accumulated Value (End of Deferral):$0.00
Total Interest Earned:$0.00
Estimated Annual Income:$0.00
Estimated Monthly Income:$0.00
function calculateAnnuity() {
// Get input values using specific IDs
var principalInput = document.getElementById('da_principal');
var yearsInput = document.getElementById('da_years');
var growthRateInput = document.getElementById('da_growth_rate');
var payoutRateInput = document.getElementById('da_payout_rate');
var resultsDiv = document.getElementById('da_results');
// Parse values
var principal = parseFloat(principalInput.value);
var years = parseFloat(yearsInput.value);
var growthRate = parseFloat(growthRateInput.value);
var payoutRate = parseFloat(payoutRateInput.value);
// Validation
if (isNaN(principal) || isNaN(years) || isNaN(growthRate) || isNaN(payoutRate)) {
alert("Please enter valid numbers in all fields.");
return;
}
if (principal <= 0 || years < 0 || growthRate < 0 || payoutRate < 0) {
alert("Please enter positive values.");
return;
}
// Calculation Logic
// 1. Calculate Future Value (Accumulated Value) using Compound Interest Formula
// FV = P * (1 + r/100)^n
var rateDecimal = growthRate / 100;
var accumulatedValue = principal * Math.pow((1 + rateDecimal), years);
// 2. Calculate Total Interest Earned
var totalInterest = accumulatedValue – principal;
// 3. Calculate Estimated Annual Payout
// Income = Accumulated Value * Payout Rate %
var annualIncome = accumulatedValue * (payoutRate / 100);
// 4. Calculate Estimated Monthly Payout
var monthlyIncome = annualIncome / 12;
// Formatting currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2,
maximumFractionDigits: 2
});
// Update DOM
document.getElementById('res_accumulated').innerHTML = formatter.format(accumulatedValue);
document.getElementById('res_interest').innerHTML = formatter.format(totalInterest);
document.getElementById('res_annual').innerHTML = formatter.format(annualIncome);
document.getElementById('res_monthly').innerHTML = formatter.format(monthlyIncome);
// Show results
resultsDiv.style.display = 'block';
}
Understanding Deferred Annuity Rates
A deferred annuity is a long-term insurance contract designed for retirement planning. Unlike immediate annuities, which begin paying out right away, a deferred annuity includes an accumulation phase. During this period, your initial premium grows tax-deferred until you decide to begin receiving income payments.
This calculator helps you estimate the future value of a Single Premium Deferred Annuity (SPDA) based on the current fixed interest rate offered by the insurance company. It also projects your potential future income stream based on estimated payout rates.
Key Factors Affecting Your Annuity Growth
Initial Single Premium: The lump-sum amount of money you transfer to the insurance company to purchase the annuity.
Deferral Period: The number of years you allow the money to grow before triggering the income phase (annuitization). Longer deferral periods typically result in higher accumulated values due to compound interest.
Guaranteed Interest Rate: In a fixed deferred annuity, this is the annual percentage yield (APY) guaranteed by the insurer for a specific period. This rate determines how fast your principal grows.
Est. Annual Payout Rate: When you convert your annuity into an income stream, the insurance company applies a payout factor based on your age and life expectancy. Older individuals typically receive higher payout rates.
The Power of Tax Deferral
One of the primary benefits of a deferred annuity is tax-deferred growth. You do not pay taxes on the interest earned while the money remains in the annuity. Taxes are only due when you withdraw the money or begin receiving income payments. This allows your investment to compound faster compared to a taxable account like a CD or savings account.
How is the Payout Calculated?
The estimated income shown in the calculator is derived from two steps:
Accumulation: We calculate the total value of your account at the end of the deferral period using the formula: Future Value = Principal × (1 + Rate)Years.
Distribution: We apply the "Est. Annual Payout Rate" to the accumulated total. For example, if your account grows to $200,000 and your payout rate is 6%, your annual income would be $12,000.
When Should You Consider a Deferred Annuity?
Deferred annuities are best suited for individuals who:
Are nearing retirement but do not need immediate income.
Want a safe, guaranteed place to grow a lump sum of cash.
Are concerned about outliving their savings and want to secure lifetime income later in life.
Have maxed out other tax-advantaged retirement accounts like 401(k)s or IRAs.
Note: Annuities often come with surrender charges if you withdraw funds early. Always review the specific contract details regarding liquidity and fees before purchasing.