A lifetime annuity calculator is a tool that estimates investment earnings and inflation to calculate the approximate amount of regular income a retiree can plan to receive from his investments, according to the U.S. Department of Labor. It helps workers assess their readiness for retirement as well as providing an opportunity to adjust their plans if necessary. The actual amount of income from an annuity may differ from the estimate as a result of unforeseen factors.
To determine the necessary amount of income for a comfortable retirement, a worker should calculate the difference between his expenses and his post-retirement income from all sources, such as Social Security or part-time work, says New Retirement. This allows him to determine the size of his potential income gap during retirement and purchase an annuity accordingly. With this information, an annuity calculator can provide him with an estimate of how much he needs to invest into an annuity to get the desired level of income during his retirement.
A lifetime annuity is a financial product that guarantees income for the rest of the retiree's life, explains New Retirement. The investor purchases the annuity with a lump-sum payment prior to retirement and receives his income stream from this investment.