1. What is a Deferred Annuity?

A deferred annuity is a contract with an insurance company that promises to pay the owner income or a lump sum of money at some date in the future. The Fidelity Deferred Annuity Calculator helps estimate the growth of your investment during the deferral period.

2. How Does the Calculator Work?

The calculator uses the future value formula:

Where:

• \( FV \) — Future Value (USD)
• \( PV \) — Present Value or initial investment (USD)
• \( r \) — Annual interest rate (decimal)
• \( n \) — Number of deferral periods (years)

Explanation: The formula calculates compound interest growth over time, showing how your initial investment grows at a specified interest rate.

3. Importance of Future Value Calculation

Details: Calculating future value helps with retirement planning by showing how much your annuity investment could grow before you begin receiving payments.

4. Using the Calculator

Tips: Enter your initial investment in USD, the annual interest rate as a decimal (e.g., 0.05 for 5%), and the number of years you plan to defer the annuity. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between immediate and deferred annuities?
A: Immediate annuities begin payments right away, while deferred annuities grow tax-deferred until you choose to begin withdrawals.

Q2: Are these guaranteed returns?
A: This calculator shows projected growth. Actual returns depend on the annuity type and market conditions for variable annuities.

Q3: How are interest rates determined?
A: Rates vary by product and market conditions. Fixed annuities offer guaranteed rates, while indexed/variable annuities have fluctuating returns.

Q4: What about fees and taxes?
A: This calculator doesn't account for fees or taxes. Actual returns may be lower due to contract fees and tax implications.

Q5: Can I access my money during the deferral period?
A: Most deferred annuities allow withdrawals but may impose surrender charges for early withdrawals.