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
Current age 
Initial investment ($) 
Annual contributions ($) 
Annual increase on contributions (%) 
Distribution
Planned distribution age 
Planning horizon (years of distribution) 
Desired after-tax annual income during distribution (today's $) ($) 
Annual increase on distributions to account for inflation (%) 
Ordinary income tax rate (during distribution) (%)help
Accumulation
Before-tax return on taxable investment (%)help
Before-tax return on tax-deferred investment (%)help
Ordinary income tax rate (during accumulation) (%)help
Is the tax-deferred investment qualified? 
   

This illustration does not include any taxes that may be due at the time the investment period ends and funds are withdrawn. Withdrawals from most tax-deferred investments are taxable.

Lower maximum tax rates on capital gains and dividends will make the investment return for the taxable investment more favorable, thereby reducing the difference in performance between the amounts shown. Investors should consider their personal investment horizon and income tax brackets, both current and anticipated, when making an investment decision as these may further impact the results of the comparison.

Changes in tax rates and tax treatment of investment earnings may impact comparative results. This information should not be construed as tax advice. Investors should seek the advice of a professional advisor prior to making a tax-related investment decision.

This illustration does not take into account certain fees and expenses that may be charged to your investment, including a sales charge. Lincoln does not provide tax or legal advice. You should contact your tax or legal advisor concerning your particular situation.

Any tax statements contained herein were not intended to be written to be used, and cannot be used, for the purpose of avoiding U.S. federal, state, or local tax penalties. Please consult your own independent advisor as to any tax, accounting, or legal statements made herein.

Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.

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