A Variable Annuity is an annuity type that typically invests in mutual funds or mutual fund sub-accounts. In RightCapital, advisors can enter existing variable annuities as assets in the Profile > Net Worth section. Annuity values and income can be tracked within the Retirement > Cash Flows.
Variable 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 Variable annuity:
To add value to the annuity account, you can either:
- Use 'Enter total balance' as the entry method to manually enter the annuity value and asset allocation:
- Use 'Enter holdings / asset class' as the entry method to specify the annuity value and asset allocation simultaneously, by entering specific tickers or (more likely for annuities) values broken out by asset class:
The future value of the variable annuity will increase based on its asset allocation, and corresponding rate of return. This will looks to your asset return assumptions.
After the value and allocation have been entered, you can use the Distributions drop-down box to illustrate how money will be withdrawn from the annuity.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 variable 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:
