1. What is a Variable Annuity?

A variable annuity is a type of annuity contract that allows for the accumulation of capital on a tax-deferred basis and offers a range of investment options. The eventual payout can vary based on the performance of the investments chosen.

2. How Monthly Payments Are Calculated

The calculator uses the following formula:

Where:

• Annuity Value — Current value of the annuity contract in USD
• Payout Rate — Annual withdrawal rate as a percentage

Explanation: The annual payout rate is divided by 12 to determine the monthly payment amount.

3. Importance of Payout Rate

Details: The payout rate determines what percentage of the annuity value will be paid out annually. This rate can vary based on contract terms, age at annuitization, and other factors.

4. Using the Calculator

Tips: Enter the current value of your annuity in USD and the annual payout rate as a percentage. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Are variable annuity payments guaranteed?
A: Payments may vary based on the performance of the underlying investments, unless you've chosen a guaranteed payout option.

Q2: How does this differ from a fixed annuity?
A: Fixed annuities provide regular, guaranteed payments, while variable annuity payments can fluctuate.

Q3: What is a typical payout rate?
A: Payout rates typically range from 4% to 6% annually, but can vary based on contract terms and age.

Q4: Are there tax implications?
A: Yes, annuity payments may be partially taxable as ordinary income. Consult a tax professional.

Q5: Can I change my payout rate later?
A: This depends on your specific annuity contract terms. Many contracts lock in the payout rate at annuitization.