Annuity Payout Calculator
Calculate monthly income from an annuity based on your lump sum, interest rate, and payout period. Compare lifetime vs fixed-period options.
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How Annuities Create Retirement Income
An annuity converts a lump sum into guaranteed periodic payments, essentially functioning as personal pension. You give an insurance company a lump sum (e.g., $250,000), and they guarantee monthly payments for life or a fixed period. The payment amount depends on: your age (older = higher payments because fewer expected years), interest rates (higher rates = higher payments), payout type (lifetime vs fixed period), and features (joint life, inflation adjustment, death benefit).
Current annuity payout rates (2025): a 65-year-old male can expect approximately $550-$650/month per $100,000 for a lifetime immediate annuity. This is higher than the 4% rule ($333/month per $100,000) because the annuity includes return of principal — once the money is annuitized, you cannot access the lump sum. Compare income strategies with our Retirement Drawdown Calculator.
Types of Annuities
Immediate annuities: Payment begins within 12 months. Best for retirees who need income now. Deferred annuities: Money grows tax-deferred, payments begin later. Good for pre-retirees. Fixed annuities: Guaranteed rate (3-5.5% currently). Predictable. Variable annuities: Returns tied to market performance. Higher potential but also higher fees (often 2-3% annually). Fixed indexed annuities: Returns tied to an index (S&P 500) with downside protection. Most financial advisors recommend using annuities for only a portion of retirement assets — enough to cover essential expenses with guaranteed income, while investing the rest for growth and flexibility.