A $500,000 annuity could pay $2,997 a month, or $35,958 a year, for a 65-year-old woman purchasing an immediate single life annuity. Annuity providers calculate the monthly payout of a $500,000 annuity based on factors such as the type of annuity and the annuitant's age and gender.
How much does a $700,000 annuity pay per month? As of January 2025, with a $700,000 annuity, you'll get an immediate payment of $4,200 monthly starting at age 60, $4,625 monthly at age 65, or $4,988 monthly at age 70.
At age 60, a $1 million annuity could pay around $62,000 annually, but delaying payouts until age 65 could increase the yearly payout to approximately $90,000. You may find drawbacks such as limited access to funds, penalties for early withdrawal, fees and inflation reducing the purchasing power of your payments.
As of May 2024, starting payments at age 60 could result in an annual income of $43,200, which breaks down to approximately $3,600 per month. Starting at age 65 could increase this to $47,580 annually, or about $3,965 per month. By delaying until age 70, the payout rises to $51,300 per year or around $4,275 monthly.
Most financial advisors will tell you that the best age for starting an income annuity is between 70 and 75, which allows for the maximum payout. However, only you can decide when it's time for a guaranteed stream of income.
There are a variety of options that are better than an annuity for retirement, depending on your financial situation and goals. These include deferred compensation plans, such as a 401(k), IRAs, dividend-paying stocks, variable life insurance, and retirement income funds.
Here, putting $750,000 into an annuity at the time of retirement can generate $57,000 per year for the rest of your life, which is more than enough to replace even a median income. Although it's important to note that this is just one estimate, your individual results can vary.
As long as you do not withdraw your investment gains and keep them in the annuity, they are not taxed. A variable annuity is linked to market performance. If you do not withdraw your earnings from the investments in the annuity, they are tax-deferred until you withdraw them.
Annuities have longer durations, but bonds can be reinvested as they mature, so both financial products can be used for the long-term. In general, bonds pay a higher yield than annuities—but not always.
The five-year rule requires that the entire balance of the annuity be distributed within five years of the date of the owner's death.
Variable annuities and a life-only income annuities are the two annuity products where you have the risk of losing money. All other types of annuities (fixed, fixed-indexed, immediate) have built-in protections that secure your principal and some even offer guaranteed minimum returns.
Key Takeaways. It may be possible to retire at 45 years of age, but it depends on a variety of factors. If you have $500,000 in savings, then according to the 4% rule, you will have access to roughly $20,000 per year for 30 years.
Annuities are taxed based on whether they are qualified or nonqualified funds, with qualified annuities subject to income tax on withdrawals and nonqualified annuities taxed on earnings first, followed by a return of original contributions.
If you die before the end of the period referred to as the “period certain,” the annuity will be paid to your beneficiary for the rest of that period. A typical period certain is usually 10 or 20 years. If you live longer than the “period certain,” you will continue to receive payments until you die.
You expect to withdraw 4% each year, starting with a $24,000 withdrawal in Year One. Your money earns a 5% annual rate of return while inflation stays at 2.9%. Based on those numbers, $600,000 would be enough to last you 30 years in retirement. In fact, by age 92 you'd still have over $116,000 in savings.
Those who wait as long as possible to collect their Social Security benefits or are lucky enough to have zero debt might find that $700,000 is enough to retire, especially in a smaller city such as Houston or Albuquerque.
While there's no federal law setting specific age restrictions for annuity purchases, many annuity companies impose their own age limitations. Typically, these range from a minimum age of 50 to a maximum age between 75 and 95. It's essential to consider these restrictions when exploring your options.
If taxes are a concern, a fixed deferred annuity may be a better option. Earnings on CDs are taxable in the year the interest is earned. With fixed deferred annuities, earnings accumulate tax deferred and are not treated as taxable income until they are withdrawn. This could help come tax-return time.
Fixed annuities
If you're risk-averse, a fixed annuity is a good option. However, the rate of growth you receive may not be enough to keep up with inflation. If this happens, you'll actually lose money by using a fixed annuity compared to other investment options.
Don't have sufficient savings to cover premiums: Buying an annuity could mean laying out $50,000 or more to cover the premium. If purchasing an annuity would drain your liquid savings and put you at risk of having to borrow to pay for unexpected expenses, it may not be worth it.
Currently, three-year fixed annuities pay up to 5.65 percent, according to Annuity.org, while 10-year fixed annuities pay up to 5.45 percent. Fixed annuities feature a minimum rate — typically 1 percent to 3 percent — that they will pay each year, even if interest rates fall below that level.
At age 60–69, consider a moderate portfolio (60% stock, 35% bonds, 5% cash/cash investments); 70–79, moderately conservative (40% stock, 50% bonds, 10% cash/cash investments); 80 and above, conservative (20% stock, 50% bonds, 30% cash/cash investments).