Annuities can provide you with guaranteed income in retirement, but the amount of annuity payouts you receive each month depends on several factors. For example, your age, gender, amount invested, interest rate, life expectancy, and the type of annuity you choose will all determine how much income you can expect.
For retirees seeking a steady stream of income, an "immediate annuity" is a popular choice. This type of annuity converts the amount you invest (usually a lump sum at the start of the annuity) into regular payments over a set period or for your lifetime. Immediate annuities may be fixed or variable interest.
You can invest as much as you want in an annuity, but balances tend to range from $200,000 to $1 million, according to Ken Nuss, founder and CEO of AnnuityAdvantage. That doesn’t mean you can’t purchase an annuity with $50,000 or $100,000. It's up to you.
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How do interest rates affect annuity payouts?
The interest rate set by the Federal Reserve is a key factor in how much your annuity will pay you each month. The higher the interest rate, the more money you get.
“What ultimately impacts the payout is the expected return the insurance company gets on the premium,” says Stephen Kates, formerly a principal financial analyst at Annuity.org. “The higher the rates are, the better.” Beyond interest rate, here are the factors that impact your annuity payment.
Amount deposited: The more you deposit in the annuity, the more of a payout you’ll receive.
Age: The older you are when purchasing an annuity, the higher the payment. The insurance company doesn’t expect you to live as long as someone who purchases an annuity at a younger age, thus the higher payment.
Gender: Since women tend to live longer than men, the payment is typically smaller for females than males. At last check, the life expectancy for males and females in the U.S. is 74.8 years and 80.2 years, respectively.
Premium amount: A higher initial premium will yield a higher monthly payment. Once you purchase an annuity, however, you cannot access the money without facing potential penalties and fees.
Payout choice: With an immediate annuity, you can have it pay you until your death, which is known as a "single-life payout." Or, you may have it continue to pay a survivor or beneficiary, known as a "joint" or "survivor payout." Your monthly annuity payout will be lower than with a single-life payout option in that type of annuity.
Period of payouts: If you choose to guarantee payments for your lifetime, your payout will be smaller than if you selected a ten-year term. Many retirees select a lifetime payout to guarantee income for the long haul.
What are immediate annuities?
Immediate annuities can be fixed, variable or indexed. With a fixed immediate annuity the interest rate is fixed when the contract is signed, which gives you that protection from fluctuations in the markets. With a variable annuity, payments fluctuate based on the performance of the underlying investment.
An indexed annuity payout is linked to the performance of a specific market index. A fixed immediate annuity typically has the smallest return but it is the safest and most consistent. You know what you are getting paid. There are no surprises.
How much does a $100,000 annuity pay per month?
Before you purchase an immediate annuity, you probably want to know how much income it will give you each month. That will help you determine how much money you want to annuitize and how it will impact your monthly budget.
While all of the factors discussed above impact the annuity payout, you can get a general idea of how much your annuity payout will be monthly below.
We’ve based the payouts on a fixed immediate, life-only annuity for a 65-year-old buyer. Data is provided by Annuity.org.
Immediate annuity amount: $50,000
Buyer age: 65
Buyer sex: Female
Payout: $300
Immediate annuity amount: $50,000
Buyer age: 65
Buyer sex: Male
Payout: $314
Immediate annuity amount: $100,00
Buyer age: 65
Buyer sex: Female
Payout: $599
Immediate annuity amount: $100,00
Buyer age: 65
Buyer sex: Male
Payout: $629
Immediate annuity amount: $200,00
Buyer age: 65
Buyer sex: Female
Payout: $1,199
Immediate annuity amount: $200,00
Buyer age: 65
Buyer sex: Male
Payout: $1,258
Immediate annuity amount: $250,000
Buyer age: 65
Buyer sex: Female
Payout: $1,498
Immediate annuity amount: $250,000
Buyer age: 65
Buyer sex: Male
Payout: $1,572
Immediate annuity amount: $300,000
Buyer age: 65
Buyer sex: Female
Payout: $1,798
Immediate annuity amount: $300,000
Buyers age: 65
Buyers sex: Male
Payout: $1,886
Immediate annuity amount: $500,000
Buyer age: 65
Buyer sex: Female
Payout: $2,997
Immediate annuity amount: $500,000
Buyer age: 65
Buyer sex: Male
Payout: $3,144
Immediate annuity amount: $750,000
Buyer age: 65
Buyer sex: Female
Payout: $4,495
Immediate annuity amount: $750,000
Buyer age: 65
Buyer sex: Male
Payout: $4,716
Immediate annuity amount: $1 million
Buyer age: 65
Buyer sex: Female
Payout: $5,993
Immediate annuity amount: $1 million
Buyer age: 65
Buyer sex: Male
Payout: $6,288
What are joint annuities?
For married couples a joint annuity is another popular choice. With a joint annuity two people, usually spouses, are named as annuitants and have the right to receive payments.
Joint annuities are designed with retired couples in mind who want guaranteed monthly income that continues after either one of the spouses is alive. Payments tend to be lower but they also tend to last longer.
A joint annuity provides a steady stream of monthly income and peace of mind knowing when you pass your spouse can still revieve the income. It also prevents the spouses from outliving their income in retirement, a real fear for many retirees.
How much does a $100,000 joint annuity pay per month?
With a joint annuity, the monthly payout is going to be smaller. Here’s a look at how much. We’ve based the payouts on a fixed immediate, life-only annuity, with both buyers aged 65. Data is provided by Annuity.org.
Joint annuity amount: $50,000
Buyers' age: 65
Payout: $280
Joint annuity amount: $100,00
Buyers' age: 65
Payout: $561
Joint annuity amount: $200,00
Buyers' age: 65
Payout: $1,122
Joint annuity amount: $250,000
Buyers' age: 65
Payout: $1,403
Joint annuity amount: $300,000
Buyers' age: 65
Payout: $1,684
Immediate annuity amount: $750,000
Buyers' age: 65
Payout: $4,212
Knowledge is power
Annuities are a way to guarantee income for your lifetime, but many factors impact how much of an annuity payout you’ll receive.
Knowing how much you can get each month based on different contract sizes can help you plan your cash flow when you do decide to retire.
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