Purchasing an annuity is one way to ensure that you have a regular income upon your retirement. Some annuities also have death benefits that provide your beneficiaries with a lump sum when you pass away. If your annuity contract has this feature, it could impact the amount of estate taxes that are paid when you die.
If you work for a company that is in business to make a profit, your employer likely offers a 401k plan that allows you to save money and defer your taxes until you reach retirement age. Tax-sheltered annuities (TSAs) are a nonprofit organization's answer to the 401k. Like a 401k, if your organization offers a TSA, you can contribute a portion of your pretax income to your TSA account, deferring taxes until you retire.
Annuities are insurance policies that provide a guarantee of income to the policyholder during his lifetime. These are also referred to as "immediate annuities" or "income annuities." The guaranteed income comes from an accumulation of savings that the policyholder gives to the insurer. Certain annuities combine the guaranteed payment element of an immediate annuity with the savings function found in traditional investment and savings accounts.
One of the most important concepts in financial valuations is the net present value of future cash flows. It is based on the idea that a dollar today (receiving cash now or paying cash now) is worth more than payments of cash in the future because of the interest compounding effect. Cash that is available at the moment can be invested and it can earn a rate of return (usually in the form of interest). Many times, financial problems require the calculation of a present value of a series of annual cash payments (an annuity). In other words, the present…
A retirement plan that gives you a steady income ensures you won't have to work into your old age. A retirement accumulation account is a form of pension set up by some companies. These accounts function in a way similar to an ordinary pension plan, and provide benefits which should be familiar to you if you've ever worked for a company offering a pension plan.
Annuities are often thought of as a retirement product. However, an annuity is any stream of cash flows. Examples of annuities include a monthly car note payment, mortgage or insurance payments. Annuities are often calculated based on a lump sum amount. This lump sum amount is referred to as the present value of the annuity.
In general terms, the value of money is used to describe a basic level of respect and appreciation for the importance of making and having money. Often, this phrase is used by parents when teaching their children about the value of money. In more literal terms, the value of money is defined by how much a particular currency is worth at the present time.
An annuity is defined as a stream of cash flows. That is, cash flows paid out on a monthly or annual basis are considered to be an annuity. If you want to invest in an annuity the bank or financial institution will request a lump sum payment to the bank or financial institution in exchange for a series of cash flows paid out over time. The amount of the lump sum is referred to as the present value of annuity.
An annuity is an investment vehicle in which an investor, with its purchase, locks in a series of specific payments to receive at future dates. It can be used as part of a retirement plan to lock in specific future payments. Under an increasing annuity, these amounts get larger further into the future in exchange for smaller returns in the short term. Determining the present value requires that you know various important numeric factors.
Your annuity is a long-term savings contract. It accumulates interest over a long period of time. Your annuity may also be converted to a monthly payment that is guaranteed for life. But, you don't need to convert your annuity to monthly payments. If you keep your annuity as a savings account, you can withdraw money as needed. Some annuities, however, do not offer a withdrawal option.
The primary purpose of an annuity is to provide you with income during retirement. This is usually accomplished through a long accumulation phase followed by a long distribution phase. To encourage investors in annuities to think longer term with their investments, annuities include provisions in their contracts about the surrender of the policy. These surrender provisions control how and under what terms you can get your money back.
The proverb "a bird in the hand is worth two in the bush" illustrates the concept of the time value of money. The money you have now is worth more than the prospect of the same amount at some point in the future. Calculating the present value of regularly spaced future amounts, or annuities, is one way to decide if an investment is worthwhile.
Calculating present value of a stock allows you to estimate the investment amount required to achieve a certain return at a future date. This is an easy and accurate calculation when working with guaranteed rates of return, such as interest from a bank account, bonds and other such fixed-rate investments. However, stocks fluctuate, so the calculation ends up being an estimate. The estimate is based on an estimated annual rate of return determined from historical data or expected future growth.
When saving money for your future, you have many choices. One of those choices is a retirement annuity. A retirement annuity is an insurance product that pays a guaranteed income to you during your retirement. Before putting money into one of these financial products, you should understand how they work and how they impact your retirement plans.
According to the Center for Retirement Research at Boston College, as of 2009 more than 50 percent of seniors were at risk of being unable to maintain their standard of living in retirement. Understanding the fundamentals of various investment opportunities is key to successful retirement planning. Looking at the characteristics of two very different products -- annuities and real estate -- is a good place to start.
An Annuity is a regular payment made at fixed intervals over a set period of time on a cash investment. A Perpetual Annuity is an annuity with no assigned end, a stream of cash payments that will continue indefinitely regardless of the recipients' or of their beneficiaries' life-spans. A Perpetual Annuity can also be referred to as a Perpetuity.
An annuity is a series of equal payments, evenly spaced, over a period of time. Calculating the present value of an annuity allows you to determine how much a future stream of payments is worth to you today. There is one basic formula that will allow you to calculate the present value of the two basic types of annuities: an ordinary annuity and an annuity due. An ordinary annuity has payments that occur at the end of the period, and an annuity due has payments that occur at the beginning of the period. You can also calculate the present value…
An annuity is a pact between an investor and the insurance company. The insurance company agrees to pay the investor in the annuity guaranteed sums of money at periodic intervals. An annuity product works just like life insurance. It is up to the discretion of the investor whether to make a one-time investment or extend it over many installments. The owner is then paid money at the end of every month or year as per the specifications in the contract.
The present value of an annuity is an estimation of how much the sum of the annuity's future cash payments are worth today. An annuity is a series of equal payments, made after fixed internals; for example, if you receive $60 every year for five years, you would have an annuity. The present value of an annuity is not the same as the sum of all future payments. Rather, it is the value of the sum.
An annuity is a contract between an investor and an insurance company (or other designated fiduciary) that allows the investor to pay a premium in order to achieve tax-deferred earnings or to gain a consistent stream of income over a lifetime. The tax-deferred option is a deferred annuity. The income option is an immediate annuity. You can give an annuity to a charity in three ways.
Annuities are retirement products offered by insurance companies. When compared to ordinary retirement investments in brokerage accounts, annuities have several features that make them attractive to investors. Because annuities can offer multiple benefits and guarantees not available in other types of accounts, understanding the different values and definitions on statements can be confusing.
Annuities are investment products you purchase through insurance companies. Earnings on an annuity grow tax deferred, treated as income when distributions are made after age 59 1/2. Part of an annuity contract is the annuity due date. This is different than the future value of the annuity. Understanding these terms will help you understand how income is derived from the contract.
Annuities are investment products issued by insurance companies to investors. The contract can be either immediate or deferred. Annuities give an investor a tax-preferred investment vehicle while promising a specific level of income. The value of an annuity depends on the structure of the annuity and what value you may be calculating.
An annuity is a financial product that periodically makes payments to the holder of the annuity in fixed amounts over a specified period of time. The future payments of an annuity earn the annuity holder interest up until the payment date. If the annuity was to be sold, its value would be based on the sum of the future payments after backing out the interest yet to be earned. This value is called the "present value," since it doesn't include the interest earned in the future. You can solve for the present value easily if you know the number of…
Annuities are investment structures designed to pay an income stream starting immediately or at a future time. As such they are broken down into two main categories: immediate annuities and deferred annuities. Immediate annuities make regular payments at designated time frames (monthly, quarterly or annually). Deferred annuities save funds in a tax-deferred investment until they are later converted to an immediate annuity. Recording the present value of an annuity will help you determine how much you need to put into an immediate annuity to garner a specified income for a predetermined number of years.
Annuities are contracts purchased from life insurance companies. In the basic form, the annuity buyer receives a series of fixed payments from the insurance company in exchange for making a lump sum payment. Annuities are used primarily to provide supplementary retirement income. They come in several variations.
An annuity is a financial instrument that pays income in a series of regular payments in return for an initial capital investment. The payments accumulate interest up until the time they are paid out. An annuity factor is the present value of an income stream that generates one dollar of income each period for a specified number of periods. The annuity factor can therefore be multiplied by the periodic annuity payment to determine the present value of the remaining annuity payments.
An annuity is a series of payments made or received at standardized intervals over a predetermined period of time; ordinary annuities are payed at the end of these standardized intervals. Knowing how to calculate the future value of an annuity can be especially helpful when dealing with financial information and decisions such as loans, mortgages and investments.
An annuity can be defined as a series of equal payments that occur evenly over a given time period. The most common type of annuity is a lease or rental payment. Finding the present value can be valuable if you wish to exchange or sell future payments for an upfront price. It's a simple matter to grasp an overview of the calculation process of the present value of an annual annuity.
Several factors are needed to calculate an annuity value. An annuity is a series of payments over time based on an initial investment plus earned income. As such, calculating its value involves factoring in the time value of money. With each payment, the remaining principle in the annuity decreases, which also must be accounted for, but the remainder continues to earn interest. The value of the annuity is the total that can be withdrawn over time until the principle is exhausted. With the correct data, the present value of the annuity can be calculated using a fairly complex equation.
An annuity pays the annuitant a stated amount of money each period, generally for the lifetime of the annuitant. This payment is made from a large account that has been deposited by the customer. In order to manage the funds in a way that allows the insurance company to guarantee the lifetime payment, withdrawals must be restricted. A surrender charge is one way this is done.