Simple way to calculate annuity payments

Annuity can be a great addition to any retirement portfolio

09:50 04 August 2013

Have you recently bought an annuity? Do you want to know how much you’re going to get? Then, read on and find out.

 

• Determine the type of annuity. The first step is to know if you have fixed or variable type of annuity. The first one offers guaranteed pay out while the latter depends on the performance of its investment. Keep in mind that you have the option to postpone the payments until a specified time or get paid as soon as you make your first contribution.

 

• Calculate the annuity payments based on your situation. Write down the amount of your annuity, the applicable interest rate, and the number of years that you’re going to receive annual payments. The formula to follow is Payment Amount x Present Value of an Annuity.

 

• If you opt to not receive your pay-outs right away, do some adjustments on your calculation. The first step is to figure out the future value of your present balance.