Deposit timing changes growth
Beginning-of-month deposits receive one additional month of modeled return compared with otherwise identical end-of-month deposits.
Accumulation and payout contract model
Follow the annuity from first deposit through final withdrawal
Model beginning or end deposits, contribution growth, returns, tax drag, percentage and contract fees, inflation, surrender value, payout return, rising withdrawals, and depletion risk.
Plan with context
An annuity is a contract path, not merely a future-value formula.
A useful analysis follows deposits, credited growth, fees, access restrictions, purchasing power, and withdrawals from the accumulation period through the planned payout horizon.
Fees compound against the owner
Percentage charges and fixed contract fees reduce today’s value and the balance available to generate future returns.
Tax deferral differs from tax freedom
Annuity tax treatment depends on account type, cost basis, jurisdiction, withdrawals, and contract rules. The entered tax drag is only a modeling assumption.
Surrender value is not account value
A contract can report a higher accumulated value while paying less if funds are withdrawn during the surrender-charge period.
Payout COLA requires more capital
Increasing withdrawals can protect purchasing power but reduces the sustainable first payment compared with a flat-payment schedule.
Guarantees are contract-specific
Fixed, indexed, and variable annuities use different guarantees, caps, spreads, participation rates, investments, riders, and insurer obligations.
Included
Starting balance, two deposit types, due or ordinary timing, contribution growth, return, tax drag, two fee types, inflation, surrender charge, payout return and fees, COLA, sustainable withdrawal, depletion, chart, and ledger.
Not included
Mortality credits, life-contingent pricing, insurer strength, riders, caps, floors, spreads, participation rates, market-value adjustments, cost-basis tax ordering, penalties, or required distributions.
Use it well
Compare the insurer illustration and prospectus, identify every fee and surrender year, test lower credited returns, and evaluate liquidity needs before committing retirement assets.