Ready-made Excel spreadsheets that compare the future cash flows
 you will receive from an annuity and competing non-annuity investments

 A commonly used selling point of an annuity is tax-deferred growth.  

So, how much growth does tax deferral add to an annuity investment each year, compared to a non-annuity investment?

(Mouseover your guess, below)

 20.0% 

 2.0%  

 0.2% 

. . . Read more

 

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With interest rates expected to rise, should you wait for higher rates before buying a fixed rate annuity? 
. . . analysis

 


The only method of determining whether an annuity will be a better investment than another type of investment is to do a detailed year-by-year calculation of the projected after-tax cash flows of both investments.

The Annuity Evaluator is a downloadable package of Excel spreadsheets that enables you to quickly and easily predict future annual cash flows from an annuity and three types of alternative investments.  The spreadsheets compare the annuity to the alternative investments in graphs and tables, enabling you to determine which will be the better investment.

Using the Annuity Evaluator -

 Start by entering basic information into the Input sheet . . .


 Input sheet, click for detail

 

. . . which automatically generates nine graphs, showing up to 50 years of cash flows for an annuity and, for comparison, three investments outside an annuity (index mutual fund, non-index mutual fund, and a fixed income investment),  . . .

  
Graphs, click for detail

. . . and four spreadsheets, showing detailed year-by-year cash flows for all four types of investments.


Cash flow sheet, click for detail

 
The results are summarized in one spreadsheet, in addition to the graphs on the Input page.


Results Summary sheet, click for detail

 

Financial professionals, please note the Annuity Evaluator uses standard financial modeling methods, for example: 

  • Timing of cash flows (investor contributions, earnings, expenses, taxes, and withdrawals) is the same for the annuity account as for the non-annuity accounts, so the present values of cash flows are the same.
  • Income tax liability on annuity withdrawals is calculated using the exempt amount based on life-expectancy as described in IRS Publication 939.
  • Investment earnings are compounded using standard formulas.

 

Summary of Methodology and Key Assumptions used in the cash flow projections generated by the Annuity Evaluator spreadsheet package

Frequently Asked Questions about the Annuity Evaluator

The Annuity Evaluator performs the following functions --

Projects up to 50 years of annual earnings, expenses, and taxes, for an annuity account sold by an insurance company and three types of alternative investments (index mutual fund, non-index mutual fund, and fixed income investment, such as a certificate of deposit or a bond).

  • Projects the year-end balances for the annuity account and the alternative investments by adjusting the account balances for the values you enter for new contributions, earnings, expenses, and withdrawals.  (Pop-up boxes suggest typical values you may enter for earnings and expenses.)

  • Calculates your projected annual liabilities for income tax and capital gains tax associated with the annuity and the alternative investments.

  • Calculates your projected annual and cumulative after-tax cash flows of the annuity and other investments to the time that withdrawals fully deplete each investment account (so that you can see which investment type provides the largest amount of after-tax income).

  • Graphs the projected results for the annuity and the alternative investments, including total and cumulative after-tax cash flows and the number of months of withdrawals provided by each investment type.

The end result of using the Annuity Evaluator is a set of 6 spreadsheets and 9 graphs that provide you a side-by-side comparison of the projected investment performance of the annuity and the alternative investments.  The Annuity Evaluator spreadsheet package enables you to make a confident decision about the income potential of the annuity, compared to the alternative investments.

The Annuity Evaluator is designed for use by someone who has  minimal knowledge of investments.  You must already have Microsoft Excel on your computer (2003 version, or newer), but you need only minimal Excel skills (for example: file open, save, click in a cell and type a number, print). It takes less than 5 minutes to enter your information into the Input sheet, which automatically produces the graphs and Results Summary sheet.
 

The Annuity Evaluator costs only $9.

Purchase of the Annuity Evaluator also includes:

  • One year of access to 760 completed packages of spreadsheets of hypothetical annuity investments. Annuity examples are included for various combinations of an investor's age, investment rate of return, and type of annuity (fixed rate deferred, variable rate deferred, and single-premium immediate).  The examples include pre-set web searches for fixed annuity products and links to prospectuses for variable annuity products.  The annuity products most comparable to the examples are included in the web searches and prospectus links. 

Annuity products include:

AG - Platinum Income
Allianz Life - Dominator Plus
Berkshire Hathaway - Single Premium Immediate
Hartford Life - Saver Certainty
ING - Guarantee Choice
Jackson National Life
John Hancock - JH Signature
Lincoln Financial  - MYGuarantee Plus
Metlife - Fixed Annuity FA
Nationwide Life - Platinum Edge
New York Life - Lifetime Income
Principal - Principal Guaranteed
Prudential - ASAP II
RiverSource Life  - Quantum Select
Sun Life Financial - Keyport Value
TIAA-CREF - Investment Horizon
Transamerica - Select
Vanguard Annuity Access - (various products)

  • An Annuity Investor's Due Diligence Questionnaire which provides 20 key questions an investor would want the annuity sales representative or annuity issuer to answer before buying an annuity.  The questionnaire is provided as a Microsoft Word document that you can edit to fit your situation, and then email to the sales representative or company, if you wish.

 

Question:  

Instead of paying $9 for the Annuity Evaluator, why not just use one of the many free annuity calculators on other websites?

Answer:

Free annuity calculators do not correctly calculate the after-tax income of an annuity’s strongest competitor, a stock or bond index mutual fund.

Most of an index fund's growth is taxed at a low long-term capital gains rate (typically 15%), but free calculators calculate annual taxes using only the higher ordinary income tax rate (typically 28%, or more).

The result is, a free calculator--whether it's on a large investment company's website or is a free spreedsheet--gives an overly optimistic picture of an annuity, compared to an index fund. 

Order and immediately download the Annuity Evaluator:

The price of the Annuity Evaluator for a single-user license (use on one computer) is $9, payable by credit card below.  The Evaluator comes with a 30-day money-back guarantee and is subject to the Terms and Conditions.

Upon purchase, you will click a link to the download page where you will save two files to your computer and will be provided a link to the example spreadsheets.  (As a backup, we also immediately email you a link to the download page.)  Downloading  the two files takes less than 1 minute.  You may complete the download immediately after purchase or anytime within 10 days afterward.  You may access the example spreadsheets anytime for one year after your purchase.

-- We are not affiliated with any annuity seller, insurance company, agent, or mutual fund, and we do not share our customers' identities with anyone. --

 

Annuity Evaluator

6 linked spreadsheets and 9 graphs, including:

  • Input spreadsheet (that feeds data to the following linked cash-flow spreadsheets and graphs)

  • Detailed cash flow spreadsheets for an annuity, and three types of non-annuity investments:  Index mutual fund, non-index mutual fund, and fixed rate investment (for example, a bond or a certificate of deposit)

  • Summary spreadsheet (compares the results from the cash flow spreadsheets)

  • 9 graphs that display your total contributions, expenses, taxes, and after-tax withdrawals as calculated in the cash flow spreadsheets

  • User Guide that explains user entries

Also includes:

  • One year of online access to 760 hypothetical annuity examples computed in the Annuity Evaluator

  • Annuity Investor's Due Diligence Questionnaire of 20 key questions that you can copy, paste, and email to an annuity sales representative

 

 

 

"The Annuity Evaluator is gaining wide use by investors and financial professionals as a low-cost tool for quickly evaluating annuity cash flow."

                


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