Finite-term retirement income: practical guide

What to prepare

• Have the figures for capital available (€), annual net return (%) and income payment years ready, from a dated document, with the period (annual, monthly or per transaction) that each input expects.
• Note the date of the transaction, since this model has no year selector and fixed rates may have changed.
• Separate known facts from assumed rates before relying on the headline result.

Understand the inputs

The calculation method

Discount each inflation-linked annual payment and divide capital by their present-value factor.

Worked example

Illustrative inputs and their result.

Example inputs

Capital available (€)

300000

Annual net return (%)

3

Income payment years

25

Annual payment increase (%)

2

Calculated example result

First Annual Payment

€13,860.82

First Monthly Equivalent

€1,155.07

How to interpret the result

Not a lifetime insurer annuity quote. Distinguish a tax saving, a tax bill, cash received and money remaining: they are not interchangeable. An estimate does not establish eligibility, filing compliance or when a refund will be paid.

Change one input of finite-term retirement income at a time and record the result; keep a record of the year, date and assumptions so a change in the result can be explained.

Common mistakes to avoid

• Do not mix tax years or apply a newly announced measure to an earlier transaction.
• Avoid counting an allowance, credit, contribution or loss twice.
• Check exclusions and personal circumstances before relying on the headline result.

Assumptions and sources

Not a lifetime insurer annuity quote. Constant net returns and end-of-year payments.

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