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Monthly Income Formula:
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Lifetime income calculation estimates the monthly income you can receive from your retirement account balance using annuity conversion principles. It helps you understand how much guaranteed income your savings can generate throughout retirement.
The calculator uses the annuity conversion formula:
Where:
Explanation: The annuity factor represents the present value of $1 per month for life, considering interest earnings and life expectancy.
Details: Understanding your potential lifetime income helps with retirement planning, ensures you don't outlive your savings, and provides peace of mind about financial security in retirement.
Tips: Enter your total retirement account balance, current age, and expected interest rate. The calculator will estimate your monthly lifetime income based on actuarial assumptions.
Q1: What is an annuity factor?
A: An annuity factor is a number that represents the present value of $1 per month for life, based on age, interest rates, and mortality tables.
Q2: How accurate are these estimates?
A: These are estimates based on simplified assumptions. Actual annuity rates may vary based on market conditions and insurance company pricing.
Q3: What interest rate should I use?
A: Use a conservative estimate based on current annuity rates or risk-free investment returns, typically between 2-4% for planning purposes.
Q4: Does this account for inflation?
A: This calculation provides nominal income estimates. For real (inflation-adjusted) income, use a real interest rate (nominal rate minus expected inflation).
Q5: Should I consult a financial advisor?
A: Yes, this calculator provides estimates only. Consult a qualified financial advisor for personalized retirement income planning.