Insurance companies provide lifetime annuity calculators to consumers to determine the amount of lifetime payments a client can receive from an initial investment. To determine the amount of money necessary to cover monthly expenses, a client should be aware of the amount of retirement income expected, social security benefits, and other sources of income. Annuity payments will supplement income received from other sources to assist in meeting monthly expenses. Lifetime annuity calculators will also help the client determine the cost of living adjustment necessary to meet monthly expenses.

Most lifetime annuity calculators require the client to enter the following information:

• Date of Birth
• Gender
• Marital Status
• Spouse’s Date of Birth
• Desired Survivor Benefit
• Desired Date to Begin Annuity Benefits
• State of Residence
• Monthly Income Needed
• Initial Investment

Some of this information is optional. Lifetime annuity calculators will assist the client in determining how much their savings will allow them to collect over a lifetime. Alternatively, lifetime annuity calculators will determine how much money is necessary for the consumer to invest to receive a specified amount over a lifetime. With this information, the client will have a better assessment of their retirement needs.

A lifetime annuity is available in two forms. In one scenario, clients invest an amount of money, and the money will sit in an annuity for a specified amount of time until the CD matures. At the end of the maturation period, clients can begin withdrawing a monthly payment over for a lifetime. In the second scenario, clients invest an initial sum of money that can be withdrawn immediately in the form of monthly payments. This is called an Immediate Lifetime Annuity. The Immediate Lifetime Annuity pays clients monthly payments for a specified period of time, which is usually 5, 10, or 20 years. Both scenarios are tax deferred and do not require tax payment until the money is withdrawn.

Spouse information is required for lifetime annuity calculations in the event of a joint annuitant. A joint annuitant is typically a spouse. The annuity will continue as long as one spouse survives.

Individuals who purchase a joint annuity will be concerned with the survivor benefit. This option allows the couple to decide if the surviving spouse will receive 100 percent of the annuity payment or if the payment will decrease to 75 percent or 50 percent. This option will take effect when one of the two clients dies. Some spouses feel that they will not need the entire amount and choose to decrease the monthly amount received. Clients should select the amount desired to determine the amount required to cover their expenses should one spouse die.

Clients will enter the amount currently in savings. The lifetime annuity calculator will determine the amount of monthly income the client can expect given the amount entered. Scenarios will be given for fixed annuities, as well as, variable annuities. Fixed rate annuities are based upon a bonds or government securities. Variable rate annuities involve riskier investments; however, the return may be greater if the interest rate increases beyond what a fixed interest rate may have been. Lifetime annuity calculators assist clients in reaching their retirement goals.