In my post about Annuity or Lump Sum,
I spoke about taking a monthly payment guaranteed or investing the lump sum in an IRA. You may be thinking you would like to see what your numbers look like.
Vanguard Lifetime Income Program
A website I used to go until recently, was Vanguard Annuity Calculator. This will bring up the Vanguard Lifetime Income Program. Now, Vanguard is a respected name in mutual funds, but it you take a look at the website address it starts out with AIG. To me that is a red flag. I don’t know about you, but I do not want to have to be concerned if the company I have my annuity with is investing in subprime mortgages or anything that the US Government has to bail them out for. So while this is a good calculator for getting an estimate on what your annuity might be, consider some other firms to give your money to if you decide to go that route.
At the Vanguard website you can get a simple quote, which is all you want to do. You want to click the link that says, “Get an instant Quote”. Or you can click other links like “Why An Income Annuity”, or “Decisions About Your Income Stream”, or if you read my post about Variable Annuities, you can read about those under “Investment Options”.
How To Get a Quote
If you click on “Get An Instant Quote”, it will bring you to a calculation page. Fill in your birth date in the format mmddyyyy. If you have a health problem and know your life insurance rate up, you can fill in that number. If you don’t, leave it at N/A. Enter your gender and state of residence. People from different states have different life expectancies. I don’t know why, but they do. If you are doing joint planning and have someone who will be collecting when you die, fill in their info in the next section. You can fill out your relationship to the joint party, if any.
How Are You Funding the Annuity?
Decide how you are funding your annuity. If you are taking a pension or 401k distribution, it will be Qualified. If it’s a Roth or after tax proceeds, check one of those boxes. Next how much do you want to put in? For the quote I gave in my last post, Annuity or Lump Sum I used $100,000 to get a base line, so I could massage my numbers. You might want to use your actual lump sum if you want.
You’ll want to choose your income stream. I choose a fixed income payment. There are a lot of options. One idea is to take the fixed sum and figure out what the monthly payment will be. Take the fixed monthly payment and divide it into the lump sum to get an idea on how long the payments will last. Then go back and change the Income Stream Option to a Joint Plan lasting so many years based on the result of the lump sum divided by the monthly payment. See if that option changes your monthly sum any.
Fill in your payment frequency – monthly, quarterly, etc. and the date you want to start. This is a good calculator to do some number crunching and seeing where you stand with different variable. Check it out and let me know what you think.
For Taking Early Retirement (TER), I hope you are enjoying a great retirement or are close to that day!
Jeremiah John
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