Pension Annuity Calculator

What is an annuity?

This is a product which is available once you’ve retired designed to give you an income for the rest of your life. This would normally be bought directly from the money from your pension fund, and would provide you with a monthly payment which incidentally is taxable net of the basic rate. Choosing the provider is important as, once you’ve done so, you will not be able to change the provider.

Enhanced Annuity

These are as one would expect, a better annuity that is designed to give you a higher income but will take lifestyle and medical history into account as well as your occupational history and perhaps even where you live. They are worth looking into.

Escalating Annuity

This is an option where you can opt to have an increased yearly income which takes into account inflation or choose a fixed % rate to increase by. So as one would expect at the beginning the annuity would pay less at the start and increase to eventually overtake a normal annuity. This might take quite a few years so one would probably consider this if you are lucky enough to retire earlier than normal or are in a sufficiently good enough state of health where you expect a long period of retirement.

Choosing between inflation linked or fixed rate will largely depend on the economic conditions and an assessment of whether inflation will rise or fall. If one expects inflation to rise then obviously it’s a good thing to make sure that you keep your income level the same by choosing that option.

Annuity Calculators

There are many companies offering annuities that will also provide a calculator. Usually you will be asked to fill in some simple details such as:

  • age
  • sex
  • pre-existing medical conditions e.g. high cholesterol
  • weight ratio
  • any serious life threatening conditions

A pension annuity calculator is a means of putting together all your personal information and calculating what income you will need to receive when you retire. After entering a few personal details into the pension annuity calculator, you can generate annuity quotes from different annuity providers. On the basis of this you will be able to decide which annuity plan is best for you and how much money you will need to invest when you retire. Many working people planning for retirement put money into the annuity by monthly payments. Others with a lump sum to invest may prefer to go this route.

It should be noted however that these results act only as a guide and are not precise annuity quotations. In order to get a formal comprehensive annuity quote, you would need to consult an annuity provider or financial adviser who can then go through the results of your pension annuity calculator in detail.

What details need to be taken into account when considering your pension annuity calculator? Some of the details you will have to put in include, age, gender, fund size, single or joint-life annuity, escalations and any health impairments.

Your age will impact on the amount of money you will receive from an annuity. Annuities are not always purchased at the start of retirement. The annuity rates offered at sixty will be different to the rates offered at seventy because the insurer is likely to have to pay out for a shorter period of time. Women are usually offered lower annuity rates than men because they tend to live longer. If you have any health impairments or lifestyle choices that are likely to impact on your life expectancy, then the pension annuity calculator may offer improved annuity rates. Typically someone who smokes heavily or drinks alcohol on a regular basis will be offered higher rates.