Compare a taxable investment to a tax-deferred annuity

Tax-deferral can have a dramatic effect on the accumulation and withdrawal amounts of an investment. This analysis will help to compare the accumulation values and after-tax withdrawals of an investment being subject to income tax each year versus deferring the tax until withdrawals occur as is common with tax-deferred annuities.

Contributions

Your age today, used to figure how many years your money has to grow.

$

The amount you're starting with today, before any further contributions.

$

How much you plan to add each year during accumulation.

Advanced options 1
%

How much your yearly contribution grows each year, such as with a raise.

Distribution

The age at which you plan to stop contributing and start withdrawing income.

How many years of income the distribution period should cover.

$

The annual income you'd like during distribution, expressed in today's dollars.

%

The tax rate applied to withdrawals once you begin taking income.

Table of Federal Income Brackets and Rates. Tax Rate For Single Filers For Married Individuals Filing Joint Returns For Heads of Households 10% $0 to $11,925 $0 to $23,850 $0 to $17,000 12% $11,925 to $48,475 $23,850 to $96,950 $17,000 to $64,850 22% $48,475 to $103,350 $96,950 to $206,700 $64,850 to $103,350 24% $103,350 to $197,300 $206,700 to $394,600 $103,350 to $197,300 32% $197,300 to $250,525 $394,600 to $501,050 $197,300 to $250,500 35% $250,525 to $626,350 $501,050 to $751,600 $250,500 to $626,350 37% $626,350 or more $751,600 or more $626,350 or more.

Advanced options 1
%

An inflation adjustment applied to your withdrawal each year.

Accumulation
%

The expected annual growth rate of the account that is taxed as you go.

Table of Historic Rates of Return. Inflation 2.9%, U.S. Treasury Bills 3.3%, Long-term Government Bonds 5.0%, U.S. Large-Company Stocks 10.4%, and U.S. Small-Company Stocks 11.8%. Past performance is no guarantee of future results. Source: Ibbotson SBBI 1926-2024

%

The expected annual growth rate of the tax-deferred account, before taxes are applied.

Table of Historic Rates of Return. Inflation 2.9%, U.S. Treasury Bills 3.3%, Long-term Government Bonds 5.0%, U.S. Large-Company Stocks 10.4%, and U.S. Small-Company Stocks 11.8%. Past performance is no guarantee of future results. Source: Ibbotson SBBI 1926-2024

%

The tax rate applied to earnings or contributions while you're still saving.

Table of Federal Income Brackets and Rates. Tax Rate For Single Filers For Married Individuals Filing Joint Returns For Heads of Households 10% $0 to $11,925 $0 to $23,850 $0 to $17,000 12% $11,925 to $48,475 $23,850 to $96,950 $17,000 to $64,850 22% $48,475 to $103,350 $96,950 to $206,700 $64,850 to $103,350 24% $103,350 to $197,300 $206,700 to $394,600 $103,350 to $197,300 32% $197,300 to $250,525 $394,600 to $501,050 $197,300 to $250,500 35% $250,525 to $626,350 $501,050 to $751,600 $250,500 to $626,350 37% $626,350 or more $751,600 or more $626,350 or more.

Qualified accounts (like a 401(k) or traditional IRA) are funded with pre-tax dollars; non-qualified annuities are funded with after-tax dollars.