7 Best Annuity Calculators in Canada

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An annuity is a lump sum investment in exchange for a steady flow of income you can earn for life. Although employer pension remains the benchmark for retirement income, only a few Canadians ever think of purchasing an annuity. The annuity concept is straightforward. You give an insurance company a significant sum of money in return for a guaranteed cash flow. An annuity calculator helps you to ascertain critical information like:

  • The amount of payment that can exhaust your funds within a given number of years.
  • The amount you need to generate a specific sum.
  • The number of years your investment will accrue payments at your specified return rate.

Before providing you with the best annuity calculator in Canada, it is pertinent to read further to see if annuities are worth your while.

Are annuities your best option?

Although annuities have many advantages, it is a niche financial product not suitable for everyone. If it is improbable, you’ll burn through your cash in your lifetime; then annuities aren’t your best financial option. They can’t be justified if you have a substantial pension because that’s a guaranteed source of lifetime income.

They also make little sense if you are in poor health with slight chances of recovery. Annuities only make sense and begin to pay off if you live longer than the average. If you’re a wealthy individual, outlasting your wealth isn’t cause for concern either.

Another reason why annuities aren’t popular in Canada is that you’re locked into the package for life once you hand over your funds. By contrast, common bonds, mutual funds, and other stock investments have growth potential and the option to cash out your funds for a considerable sum if needed. If you want to live your loved ones something, you can count annuities out of the equation because the steady payouts trickle to a stop after you pass.

However, annuities aren’t a hero zero preposition; ideally, you should think of them as one stream of income for your overall retirement income plan. They work hand in glove with other investment products, including mutual funds and GICs. It would be best to find the right balance in acquiring these assets and striking a fine line between receiving lump-sum payments and growth potential.

What amount do you need?

Suppose you’re banking only on your investment portfolio consisting of bonds and stocks for your retirement. In that case, you need to set a more cautious withdrawal rate because the market can perform poorly, affecting your return rate. And that is why you need to add annuities as a backup option because you’re guaranteed a relatively high return without any risk of depleting your funds.

A good strategy is to combine annuities with other government pensions to take care of essential spending. Annuities afford you the freedom to take more risks with other investable assets, which may increase the funds you pass on to your beneficiaries if the market performs well and you live a long time.

Best annuity calculators in Canada

Life Annuities Annuity Calculator

The Life Annuities annuity calculator is a valuable online tool that enables you to estimate expected income after purchasing a life annuity from a specific annuity company. Some of the features include:

  • Annuity type
  • Province
  • Gender
  • Age
  • Deposit amount
  • Guarantee period
  • Payment frequency

RBC Annuity Calculator

The RBC Insurance annuity calculator is arguably the best annuity calculator in Canada and works like a questionnaire, asking you questions about yourself to provide an estimate of your annuity returns. Some of the questions you’ll be asked include:

  • Your gender
  • The age you plan to purchase an annuity.
  • The amount you intend to contribute towards your annuity
  • Your expected RRSP/RRIF growth rate.

Bank Rate Annuity Calculator

The Bank Rate annuity calculator doesn’t provide a lot of information; however, it’s still efficient enough to give you an excellent estimate of what your annuity returns should look like. Some of the features include:

  • Withdrawal amount
  • Interval between withdrawals
  • Starting principal
  • Annual growth rate
  • Length of annuity in years

Calculator.net Annuity Payout Calculator

This calculator can give you an estimate of the annuity returns for a specific payout length or provide an estimate of the length of time the supposed annuity will last if provided with a fixed payout sum. The annuity calculator also considers inflation to give as accurate a piece of information as possible. Some of the features include:

  • Starting principal
  • Interest return / Return rate
  • Inflation Rate
  • Years to payout
  • Payout frequency

New Retirement Lifetime Annuity Calculator

The New Retirement Lifetime annuity calculator is an excellent tool recommended endorsed by certified retirement financial professionals. The calculator can calculate your benefits and provides an option for your spouse to continue receiving your annuity if you pass away before they do. Some of the features include:

  • Your age
  • Gender
  • Starting income
  • Investment Amount
  • Spouse inclusion

Canadian Annuity Calculator

The Canadian annuity calculator helps individuals to calculate the following:

  • The amount of monthly income you’ll get from a specific investment amount or,
  • How much you’ll need to invest to receive the monthly income sum you enter.

You may also enter a calculation covering your spouse, but you have to enter their information into the calculator to get the best results. Some of the features are:

  • Your current age
  • Your residence
  • Your gender
  • Income start date
  • Investment
  • Monthly income

Sun Life Annuity Calculator

The Sun Life annuity calculator provides a fair estimate of how much you can earn as a guaranteed income with a life annuity. You can also get a customized quote from a financial advisor. Some of the information you’d need to provide include:

  • The age you plan to purchase an annuity.
  • Your gender
  • The amount
  • Your investments (whether registered or non-registered)
  • Estimated marginal tax rate post-retirement

When to Purchase Annuity

As with many investment products, the payout rate for annuities is subject to interest rates, which by historical standards are relatively low. The difference is that annuities provide larger payments when you purchase them when you’re older. Most experts say the best age to purchase annuities is 70.

It is recommended you purchase and carefully annuitize between three to five years. For instance, if you intend to annuitize C$300,000, you can buy C$100,000 of annuities at the age of 70, 72, and 74. This timing is excellent for a retiree who must convert his RRSPs into annuities or RRIFs at 71. You can decide to annuitize some funds in the process. 

Be mindful that annuity calculators are strictly for information purposes only. Ensure you see a financial professional before buying an annuity package.

How to purchase an annuity

Go shopping

Do your research and shop around to find the best rates. The range between the lowest and highest quotes is usually 5% – 10%, and that translates into thousands of dollars earned or saved in the long term.

Get a guarantee

Many Canadian seniors worry they’ll pass on soon after purchasing an annuity with nothing left to their beneficiaries. But annuities are often sold with guaranteed income includes in the package – at least for a limited number of years.

Protect against inflation

A standard annuity package is often exposed to inflation. However, a better option is to purchase a fixed-rate annuity with a growth potential of 2% per annum. Your payments may start at a lower rate but will steadily increase through the years to protect your buying power – except in situations where there’s a dramatic inflation spike.

Annuity Terminologies

Annuity

Annuities are financial products offered by insurance companies that ensure steady payments to the buyer (annuitant).

Annuities come in many packages and can be complex to understand. But it has excellent benefits to the buyer like lifetime income and yearly adjustments to your living expenses.

Lifetime Annuity

Lifetime annuities are financial products that you buy with a considerable amount of money. What you get in return is a steady income for life. Lifetime annuities differ from term annuities, which provide you a regular income for a limited time.

Deferred Lifetime Annuity

This annuity activates at a specified future. A deferred annuity works best when you believe there’ll be an income need at a later date. For instance, if you are working but think you’ll be losing your job and need an income to tide over until you get another job.

Fixed Annuity

This annuity pays a fixed rate. The insurance company often invests the lump-sum payment into low-risk investments like mutual funds and other government securities.

Variable Annuity

This annuity pays a flexible rate that is determined by the market. Variable annuities often put money into riskier investments like equity funds. They provide a higher return while holding more risk.

Term Annuity

This annuity guarantees regular payments for a specific time, like 10 or 20 years.

FAQs

How does an annuity calculator work?

An annuity calculator helps you to determine how much lifetime income your savings can purchase. If you know the amount of income you need, you can determine how much it will cost upfront.

What happens to the money in an annuity when you die?

In some cases, the payments come to an end or are inherited by a beneficiary selected by the buyer.

How long does an annuity last?

Annuities may last a lifetime or a specific period depending on your annuity package.

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Kareena Maya is a freelance writer focused on the personal finance and travel spaces. He frequently writes about credit cards, banking, student loans, insurance, travel rewards and more. His work has been featured in publications such as Forbes Advisor, Bankrate, Credit Karma, Finance Buzz, The Ascent and Student Loan Planner.

Kareena Maya is a freelance writer focused on the personal finance and travel spaces. He frequently writes about credit cards, banking, student loans, insurance, travel rewards and more. His work has been featured in publications such as Forbes Advisor, Bankrate, Credit Karma, Finance Buzz, The Ascent and Student Loan Planner.