Annuity Tables
by Ellise Walsh

It is no secret that more and more people need help saving for a comfortable retirement. With traditional defined benefit pension plans quickly becoming a thing of the past, the burden of saving enough money for retirement is increasingly falling on the individual worker. Annuity programs are a popular way to sock money away for your retirement, and annuity tables can be very useful both to the retiree-to-be and the annuity sales professional.

Annuities are one of the most popular ways to put money away for retirement or other needs. In addition to other retirement vehicles like 401(k) plans, 403(b) plans, traditional IRA accounts and Roth IRA accounts, annuities can provide a convenient way to put money away on a monthly basis and have it grow while you are working. The power of compounding will help those small monthly payments into your annuity account grow into a significant sum that will help provide you with an excellent income after you have stopped working and entered retirement.

Annuity tables can help the worker and the annuity sales professional to determine how much their money will grow. By entering the monthly payments to the annuity, the number of years the money will remain in the annuity, and the expected rate of return, the annuity tables can help determine how much can be withdrawn each month in retirement and how long the money in the annuity will last.

For a fixed rate annuity program, the rate of return may be known in advance. On the other hand, a variable rate annuity will fluctuate throughout the life of the annuity, along with the underlying investments the variable rate annuity contains. In the case of a variable rate annuity, annuity tables rely on historical rates of return for various types of investments. While any annuity sales professional will warn you that past performance is not an indication of future performance, it is generally acceptable to use these historical rates of return when calculating the future value of an annuity investment.

Of course, as with any major financial decision, it is important to shop around to find the best annuity program for your needs. One of the most important things to keep in mind are the charges and expenses charged by the annuity provider. Finding the lowest cost annuity program is vital to the long term performance of your fixed rate or variable rate annuity. Even a small difference in the expense ratio can make a huge difference, particularly when spread over the 20 to 30 year life of the annuity program.

Finding an annuity program free of surrender fees and other such fees is important as well. Surrender charges can eat into your return and greatly reduce the performance of your annuity over time. It is important that you be permitted to move your annuity program to another provider if you wish.

No matter what type of annuity you decide to open, or which annuity provider you choose, the most important step is the decision to start saving for your retirement while you are still young. Time is definitely on your side when saving for retirement. The sooner you begin saving for your retirement, the more comfortable your golden years will be.

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