How do annuity calculators work?

14th February 2012

When you are looking for a retirement annuity it can seem like an incredibly difficult challenge – especially with so many different providers to choose from offering you a wide range of different options. As a result, annuity calculators have been designed to aid you in your search for an appropriate annuity by providing you with a guidance system as to what level of annuity income you could be looking at depending on your circumstances.

Designed to give the user a quick idea of what type of income they could expect, they are primarily used so that new annuitants can get an idea of the income level that they could expect to receive. In addition it allows users to add and remove different options to see how this could potentially have an effect on their annuity income, which can be an invaluable tool for people who may remain undecided about which annuity is best for them.

What are some benefits of annuity calculators?

Annuity calculators offer a range of benefits, but these need to be taken with a pinch of salt, remembering that the amounts are only estimations and there are many other factors that may need to be taken into consideration before a genuine amount can be reached. That said, for people who are looking to get a general idea of what type of income they can expect, and which plans and options might be best for them, they are a great way to demonstrate the difference in income between each plan and allow the user to make some decisions as a result.

What are some drawbacks of annuity calculators?

Annuity calculators do have a number of drawbacks and unfortunately they can sometimes draw a user in to believing that they are entitled to a much higher income than what they will actually receive. This can give false hope to a user who may then believe that this is how much annuity income they can actually receive. Before an annuity can be taken out, thorough research needs to be conducted to confirm the actual value of an annuity income, rather than taking as gospel the figures given out by an annuity calculator.

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