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 (30 to 99)

Initial investment ($)

Annual contributions ($)

Annual increase on contributions (0% to 200%)

Distribution

Planned distribution age (30 to 99)

Planning horizon (years of distribution) (1 to 40)

Desired after-tax annual income during distribution (today's $) ($)

Annual increase on distributions to account for inflation (0% to 100%)

Ordinary income tax rate (during distribution) (0% to 75%)

Accumulation

Before-tax return on taxable investment (-12% to 12%)

Before-tax return on tax-deferred investment (-12% to 12%)

Ordinary income tax rate (during accumulation) (0% to 75%)

Is the tax-deferred investment qualified?NoYes

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