How do I model buying an annuity in the future?
Where to find it: INCOMES → Add Income
Add the appropriate registered or prescribed annuity in INCOMES with a future payment start. On its details form, select the funding account and the percentage of that account to use for the purchase. Enter the estimated annuity payout rate and complete the contract assumptions.
Leave the common annual-payment amount fields at zero when the payment is to be calculated from the funding account. TIME MACHINE calculates the available account balance at purchase, uses the selected percentage and estimates the resulting payment.
The payout rate is annual payment divided by purchase cost, not an investment return. For example, $500 a month on a $100,000 purchase is a 6% payout rate: $6,000 divided by $100,000. Part of an annuity payment can be a return of the purchase capital.
Inspect the purchase-year withdrawal and subsequent income in the report. The feature estimates cash flows; it does not enforce every legal condition for a registered or deferred annuity purchase.