1. What is Annuity Income?

Annuity income is the regular payment you receive from an insurance company in exchange for a lump sum investment (your pension pot). It provides guaranteed income for life or a specified period.

2. How Does the Calculator Work?

The calculator uses the annuity formula:

Where:

• \( Pot \) — Your total pension savings amount ($)
• \( Annuity Rate \) — The percentage rate offered by the annuity provider (%)

Explanation: The calculation multiplies your pension pot by the annuity rate (expressed as a percentage) to determine your annual income.

3. Importance of Annuity Calculation

Details: Calculating potential annuity income helps you plan for retirement, compare different annuity offers, and make informed decisions about your pension options.

4. Using the Calculator

Tips: Enter your total pension pot amount in dollars and the annuity rate percentage offered by providers. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What factors affect annuity rates?
A: Annuity rates are influenced by age, health, interest rates, inflation expectations, and the type of annuity chosen.

Q2: Are annuity rates guaranteed?
A: Once you purchase an annuity, the rate is typically locked in for the duration of the contract, providing predictable income.

Q3: Should I shop around for annuity rates?
A: Yes, rates can vary significantly between providers. It's important to compare offers to get the best income from your pension pot.

Q4: What types of annuities are available?
A: Options include fixed, variable, immediate, deferred, lifetime, and period-certain annuities, each with different features.

Q5: Can I change my annuity once purchased?
A: Most annuities are irreversible, so it's important to carefully consider your options before committing to a specific product.