Use this calculator to get an illustrative estimate of the annual and monthly income you might receive from purchasing a lifetime annuity. This tool provides a simplified calculation based on general annuity principles and is not an offer or guarantee from Legal & General or any other provider. Actual rates depend on market conditions, specific product features, and individual circumstances.
Male
Female
None
5 Years
10 Years
Level Income
3% Escalating Income
Understanding Annuities with Legal & General
An annuity is a financial product that provides a guaranteed income stream, typically for life, in exchange for a lump sum payment. It's a popular choice for retirees looking to secure a predictable income during their retirement years.
How Annuities Work
When you purchase an annuity, you hand over a sum of money to an insurance company (like Legal & General). In return, they promise to pay you a regular income for a specified period, often for the rest of your life. The amount of income you receive depends on several factors:
Lump Sum Invested: The more you invest, the higher your potential income.
Your Age: Generally, the older you are when you buy an annuity, the higher your annual income will be, as your life expectancy is shorter.
Your Gender: Historically, women have longer life expectancies than men, which can sometimes lead to slightly lower annuity rates for women (though many providers now offer gender-neutral pricing or use broader mortality tables).
Annuity Type:
Level Annuity: Provides a fixed income that doesn't change over time. This offers the highest initial income but its purchasing power can be eroded by inflation.
Escalating Annuity: Your income increases each year, either by a fixed percentage (e.g., 3% or 5%) or in line with inflation (e.g., Retail Price Index – RPI). This protects against inflation but starts with a lower initial income.
Guaranteed Period: You can choose to have your annuity payments guaranteed for a certain number of years (e.g., 5 or 10 years). This means if you die within that period, payments will continue to your beneficiaries until the guarantee period ends. Opting for a guaranteed period typically results in a slightly lower annual income.
Health and Lifestyle (Enhanced Annuities): If you have certain health conditions or lifestyle factors that might reduce your life expectancy, you could qualify for an 'enhanced' or 'impaired life' annuity, which offers a higher income. This calculator does not account for enhanced annuities.
Market Conditions: Annuity rates are influenced by prevailing interest rates and gilt yields. When these are higher, annuity rates tend to be more favourable.
Why Consider an Annuity?
Annuities offer peace of mind by providing a guaranteed income that you cannot outlive. This can be particularly appealing for those who want certainty in their retirement planning and wish to avoid investment risks.
Legal & General's Role
Legal & General is a major provider of annuities in the UK, offering a range of options to suit different needs. While this calculator provides a general estimate, it's always recommended to get a personalized quote directly from Legal & General or an independent financial advisor to understand the specific rates and products available to you.
Important Disclaimer:
This calculator provides an illustrative estimate only and should not be considered financial advice. The rates used are hypothetical and do not reflect actual Legal & General annuity rates, which are subject to change and depend on individual circumstances, market conditions, and specific product terms. Always seek professional financial advice before making any decisions about your retirement income.
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function calculateAnnuity() {
var lumpSum = parseFloat(document.getElementById("lumpSum").value);
var annuitantAge = parseInt(document.getElementById("annuitantAge").value);
var annuitantGender = document.getElementById("annuitantGender").value;
var guaranteedPeriod = parseInt(document.getElementById("guaranteedPeriod").value);
var escalationType = document.getElementById("escalationType").value;
var resultDiv = document.getElementById("result");
// Input validation
if (isNaN(lumpSum) || lumpSum <= 0) {
resultDiv.innerHTML = "Please enter a valid lump sum amount.";
return;
}
if (isNaN(annuitantAge) || annuitantAge 90) {
resultDiv.innerHTML = "Please enter a valid age between 55 and 90.";
return;
}
// Illustrative Base Annuity Rate (for a 65-year-old male, level, no guarantee)
var baseRate = 5.0; // Example: 5.0%
// Adjust for Age
var ageDifference = annuitantAge – 65;
baseRate += ageDifference * 0.15; // +0.15% for every year older, -0.15% for every year younger
// Adjust for Gender
if (annuitantGender === "female") {
baseRate -= 0.2; // Females typically have slightly lower rates due to longer life expectancy
}
// Adjust for Guaranteed Period
if (guaranteedPeriod === 5) {
baseRate -= 0.1; // Slightly lower rate for a 5-year guarantee
} else if (guaranteedPeriod === 10) {
baseRate -= 0.2; // Lower rate for a 10-year guarantee
}
// Adjust for Escalation Type
if (escalationType === "3percent") {
baseRate -= 1.5; // Significantly lower initial rate for 3% escalating annuity
}
// Ensure rate doesn't go below a reasonable minimum (e.g., 1%)
if (baseRate < 1.0) {
baseRate = 1.0;
}
var annualIncome = lumpSum * (baseRate / 100);
var monthlyIncome = annualIncome / 12;
resultDiv.innerHTML =
"Estimated Annual Income: £" + annualIncome.toFixed(2) + "" +
"Estimated Monthly Income: £" + monthlyIncome.toFixed(2) + "" +
"(Illustrative rate: " + baseRate.toFixed(2) + "%)" +
"Disclaimer: This is an estimate based on hypothetical rates and does not represent actual Legal & General annuity offers. Seek professional financial advice.";
}
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