A Fixed Annuity is an annuity type that earns a specific rate of return each year. In RightCapital, advisors can enter existing fixed annuities as assets in the Profile > Net Worth section. Annuity values and income can be tracked within the Retirement > Cash Flows.
Fixed annuities are entered similarly to other types of investment accounts. Navigate to the Profile > Net Worth tab (or Step 4 of the initial data entry) and click Add Account > Investment. Within the Account type dropdown, select Qualified, Non-qualified, or Roth annuity:
After choosing an annuity as your account type, you can specify the Annuity type from the drop-down box to illustrate a Fixed annuity:
To add value to a fixed annuity, simply enter the crediting rate and the total balance. The future value of the fixed annuity will increase based on the crediting rate.
The Asset allocation for Fixed Annuities is illustrative, and will not impact the future-looking retirement projections within the Retirement module.
For premium and platinum subscribers, the asset allocation will impact the Risk module, if you choose to include the fixed annuity in a client's risk analysis.
After the value and crediting rate have been entered, you can use the Distributions drop-down box to illustrate how money will be withdrawn from the annuity. Distribution options include regular withdrawals, annuitization, and lifetime income:
- Regular withdrawals will treat the annuity similarly to other investments. Income distribution cards can be added in the Profile > Income section to withdraw a specific amount each year from the annuity.
- Annuitization will surrender the account value in exchange for a guaranteed fixed income stream. This option will populate new fields to enter the details of the annuitization.
- Lifetime income can be used for an annuity that has a guaranteed lifetime income rider or associated benefit. This option will populate new fields to enter the details of the lifetime income guarantee.
After adding an existing fixed annuity in the Profile > Net Worth section, you can track the value of the annuity as well as the income stream within the Retirement > Cash Flows tab.
The value of the Annuity can be tracked within the Cash Flows > Accounts tab, by viewing the Ending Balance by Accounts:
The income stream from the annuity can be tracked within the Cash Flows > Summary tab, by clicking into the underlined header for Income Inflows:
