Annuity Income Calculator: How Much Will Your Annuity Pay?

If you are considering an annuity for retirement income, one of the first questions you will ask is: how much will it actually pay me each month? The answer depends on several factors, including how much you invest, your age, the type of payout you choose, and current interest rates. Understanding how annuity income is calculated helps you make informed comparisons and set realistic expectations for your retirement budget.

This guide walks you through the key factors that determine annuity income, provides example payout amounts at different ages and investment levels, explains how different payout options affect your monthly check, and offers guidance on estimating your own annuity income. If you are new to annuities, start with our overview of what an annuity is and how it works before diving into the income calculations. This article is for educational purposes only and does not constitute financial advice. Consult a qualified financial advisor before making decisions about annuities.

How Annuity Income Is Calculated

When you purchase an income annuity, an insurance company agrees to pay you a regular income stream in exchange for a lump sum of money (your premium). The company invests your premium, pools it with money from other annuity holders, and uses actuarial calculations to determine how much it can pay each person every month while still meeting its obligations and remaining profitable.

The calculation behind your monthly annuity payment involves several interrelated factors. Here are the most important ones.

Purchase Amount (Premium)

The amount of money you put into the annuity is the single largest determinant of your monthly income. More money in means more money out. Annuity income scales roughly in proportion to your premium. If a $100,000 annuity pays $590 per month, a $200,000 annuity from the same company under the same terms would pay approximately $1,180 per month. Most income annuities require a minimum premium between $10,000 and $25,000, though some carriers set higher minimums.

Your Age at the Time Payments Begin

Your age when income payments start is a critical factor. The older you are, the higher your monthly payment. This is because the insurance company expects to pay you for fewer years. A 70-year-old has a shorter remaining life expectancy than a 60-year-old, so the insurer can afford to pay more each month and still expect to come out even. According to Social Security Administration actuarial tables, the average remaining life expectancy for a 60-year-old male is approximately 22 years, while a 70-year-old male has approximately 15 years remaining. That difference of seven years translates directly into higher monthly payments for the older buyer.

Gender

Women generally receive slightly lower monthly annuity payments than men of the same age because women have longer average life expectancies. A 65-year-old woman is expected to live approximately two to three years longer than a 65-year-old man, which means the insurance company expects to make more total payments. To compensate, the monthly amount is set slightly lower. The difference is typically around 3 to 8 percent, depending on the specific ages and the insurer's mortality tables.

Interest Rates

The prevailing interest rate environment significantly affects annuity payouts. Insurance companies invest your premium primarily in bonds and other fixed-income securities. When interest rates are high, insurers earn more on those investments, which allows them to offer higher monthly payments. As of February 2026, interest rates remain elevated compared to the historically low levels of 2020 and 2021, which means annuity payouts are currently favorable. See our guide to the best fixed annuity rates in 2026 for current rate comparisons.

Payout Type

The payout option you select has a major impact on your monthly income. Life-only payouts provide the highest monthly amount because the insurer keeps the remaining balance when you die. Adding a period certain guarantee, a joint life provision, or a cash refund feature reduces your monthly payment because the insurer takes on more obligation. We cover payout types in detail in a later section of this article.

SPIA Income Examples by Age and Investment Amount

A single premium immediate annuity (SPIA) is the simplest type of income annuity. You hand over a lump sum and begin receiving monthly payments right away, typically within 30 days. The following examples show approximate monthly income amounts for a male purchaser with life-only payments based on February 2026 rate conditions. Actual quotes will vary by carrier, and female payout amounts will be slightly lower.

$100,000 Premium

With a $100,000 SPIA purchase and life-only payments, approximate monthly income by age is as follows. A 60-year-old can expect approximately $530 to $560 per month ($6,360 to $6,720 per year). A 65-year-old can expect approximately $580 to $620 per month ($6,960 to $7,440 per year). A 70-year-old can expect approximately $660 to $710 per month ($7,920 to $8,520 per year). The difference between age 60 and age 70 is roughly $130 to $150 per month, illustrating how significantly waiting affects your payout.

$250,000 Premium

With a $250,000 SPIA purchase and life-only payments, approximate monthly income by age is as follows. A 60-year-old can expect approximately $1,325 to $1,400 per month ($15,900 to $16,800 per year). A 65-year-old can expect approximately $1,450 to $1,550 per month ($17,400 to $18,600 per year). A 70-year-old can expect approximately $1,650 to $1,775 per month ($19,800 to $21,300 per year). At the $250,000 level, the income begins to meaningfully supplement Social Security and can cover a significant portion of essential living expenses for many retirees.

$500,000 Premium

With a $500,000 SPIA purchase and life-only payments, approximate monthly income by age is as follows. A 60-year-old can expect approximately $2,650 to $2,800 per month ($31,800 to $33,600 per year). A 65-year-old can expect approximately $2,900 to $3,100 per month ($34,800 to $37,200 per year). A 70-year-old can expect approximately $3,300 to $3,550 per month ($39,600 to $42,600 per year). Combined with average Social Security benefits of around $1,900 per month, a $500,000 SPIA at age 65 could provide total guaranteed income of approximately $4,800 to $5,000 per month, which is sufficient to cover essential expenses for many households.

These figures are approximate and based on competitive rates available in February 2026. Rates change frequently, and individual quotes can vary by 10 to 20 percent between carriers. Always obtain multiple personalized quotes before making a purchase decision.

How Payout Options Affect Your Monthly Income

The payout option you choose is one of the most important decisions when purchasing an income annuity. Each option involves a trade-off between higher monthly income and additional protections. Understanding these trade-offs is essential, especially when comparing immediate versus deferred annuities. Here are the most common payout types.

Life Only (Single Life)

A life-only annuity pays income for as long as you live, with no minimum guarantee period. When you die, payments stop immediately and nothing is paid to your heirs. Because the insurance company keeps any remaining balance, life-only annuities offer the highest monthly payout of any option. This is the purest form of longevity insurance. For a 65-year-old male investing $100,000, a life-only SPIA might pay approximately $600 per month. Life only is best suited for individuals whose primary concern is maximizing monthly income and who do not need to leave the annuity funds to beneficiaries.

Life with Period Certain (10-Year or 20-Year Guarantee)

A life with period certain annuity pays income for your lifetime but guarantees a minimum number of years of payments. If you die during the guaranteed period, your beneficiary receives the remaining payments until the period ends. A 10-year period certain is the most common option. For a 65-year-old male investing $100,000, a life with 10-year period certain SPIA might pay approximately $570 to $580 per month, roughly 3 to 5 percent less than life only. A 20-year period certain reduces the payout further, to approximately $530 to $550 per month, about 8 to 12 percent less than life only. The period certain option provides peace of mind that if you die soon after purchasing the annuity, your investment is not entirely lost.

Joint Life (Joint and Survivor)

A joint life annuity covers two people, typically spouses, and continues paying as long as either person is alive. This is the most popular option for married couples. The standard form is joint and 100 percent survivor, meaning the payment stays the same after the first spouse dies. For a 65-year-old male and 63-year-old female investing $100,000, a joint life with 100 percent survivor SPIA might pay approximately $490 to $520 per month, roughly 15 to 20 percent less than a single life-only payout. Some joint life annuities offer a reduced survivor benefit, such as joint and 50 percent or joint and 75 percent. With joint and 50 percent survivor, the payment to the surviving spouse drops to half the original amount after the first spouse dies, but the initial payment while both are alive is higher, perhaps $540 to $560 per month.

Cash Refund and Installment Refund

Refund options guarantee that your beneficiaries will receive at least as much as you originally invested. With a cash refund annuity, if you die before receiving total payments equal to your premium, your beneficiary receives the difference as a lump sum. With an installment refund, the beneficiary continues to receive the monthly payments until the total paid equals the original premium. For a 65-year-old male investing $100,000, a life with cash refund SPIA might pay approximately $555 to $575 per month, about 4 to 7 percent less than life only. Refund options are popular among buyers who want lifetime income but are uncomfortable with the possibility of losing their entire investment if they die early.

Deferred Income Annuities: Higher Payouts Through Accumulation

Not everyone needs income immediately. A deferred income annuity (DIA), sometimes called a longevity annuity, lets you pay a premium now and delay the start of income payments for a set number of years. During the deferral period, your money grows through interest accumulation and mortality credits. Mortality credits are a unique benefit of annuities. Because some buyers will die before payments begin, the insurance company can redistribute those unpaid funds to surviving annuitants, boosting payouts for everyone who lives to the income start date.

The longer you defer, the higher your eventual monthly payment. For example, a 55-year-old who invests $100,000 in a DIA with payments beginning at age 65 might receive approximately $850 to $950 per month, compared to the approximately $530 to $560 per month that a 60-year-old would receive from an immediate annuity. If the same 55-year-old defers payments until age 70, the monthly amount could reach $1,100 to $1,250 or more. The trade-off is that you give up access to the money during the deferral period and receive nothing if you die before payments begin, unless you add a return-of-premium rider.

A qualified longevity annuity contract (QLAC) is a type of DIA that can be purchased within a qualified retirement account such as an IRA or 401(k). QLACs allow you to defer required minimum distributions on the amount invested (up to $200,000 as of 2026) until payments begin, which can reduce your taxable income during early retirement years. Payments from a QLAC typically begin between ages 72 and 85.

How to Estimate Your Monthly Annuity Income

Estimating your annuity income involves a straightforward process. While the exact amount will require a formal quote from an insurance carrier, you can get a reasonable estimate by following these steps.

1. Determine your premium amount. Decide how much of your savings you want to allocate to an annuity. Most financial advisors recommend using only a portion of your retirement savings, enough to cover the gap between your essential expenses and your other guaranteed income sources (Social Security, pension). Keep the rest liquid and invested for growth and emergencies.
2. Note your age and gender. Your age when payments begin and your gender will affect the quote. If you are planning for a spouse as well, you will need both ages for a joint life quote.
3. Choose your payout type. Decide whether you want life only, life with period certain, joint life, or a refund option. Each choice affects your monthly amount, as described in the payout section above.
4. Decide on immediate or deferred. If you need income now, an immediate annuity is appropriate. If you want to maximize income later, a deferred income annuity with a 5, 10, or 15-year deferral period will provide higher payments.
5. Request quotes from multiple carriers. Contact at least three to five insurance companies or work with an independent agent who represents multiple carriers. Provide the same details to each so you can make an accurate comparison. Rates can vary significantly, so shopping around is essential.
6. Factor in taxes. Remember that a portion of your annuity payment may be taxable. If you purchased the annuity with after-tax money, only the earnings portion is taxed. If you used pre-tax retirement funds, the entire payment is taxable as ordinary income. Calculate your after-tax income to set accurate expectations for your budget.

The Impact of Inflation Riders on Annuity Income

One of the biggest risks to annuity income is inflation. A fixed payment that seems comfortable today may feel inadequate in 15 or 20 years. At a 3 percent annual inflation rate, the purchasing power of $600 per month drops to the equivalent of approximately $360 after 20 years. To combat this, some insurance companies offer cost-of-living adjustment (COLA) riders that increase your payments each year.

A typical COLA rider increases payments by a fixed percentage each year, often 2 or 3 percent. The catch is that your initial payment will be significantly lower. For example, a 65-year-old male investing $100,000 in a life-only SPIA without a COLA might receive approximately $600 per month from day one. The same annuity with a 3 percent COLA rider might start at only $430 to $460 per month. However, with the 3 percent annual increase, the payment would grow to approximately $580 per month by year 10, approximately $780 per month by year 20, and approximately $1,050 per month by year 30.

The break-even point on a COLA rider, meaning the point at which total payments with the rider surpass total payments without it, is typically around 12 to 16 years. If you expect to live well beyond that point, the COLA rider can be a valuable addition. If you have a shorter life expectancy or other inflation-protected income sources, the lower starting payment may not be worth it. Some retirees take a middle path by purchasing a level annuity to cover essential expenses and maintaining a separate investment portfolio to provide inflation-adjusted supplemental income.

Taxes and Annuity Income

Understanding the tax treatment of annuity income is essential for accurate retirement planning. The tax rules depend on whether you purchased the annuity with pre-tax or after-tax dollars. For a comprehensive explanation, see our guide on how annuities are taxed.

For nonqualified annuities (purchased with after-tax money), the IRS uses an exclusion ratio to determine the tax-free portion of each payment. This ratio divides your total investment (cost basis) by the expected total return over your lifetime. The result is the percentage of each payment that is tax-free. The remaining percentage is taxed as ordinary income. For example, if your exclusion ratio is 60 percent and your monthly payment is $600, then $360 is tax-free and $240 is taxable each month.

For qualified annuities (purchased with pre-tax money from an IRA, 401(k), or similar account), the entire payment is taxable as ordinary income because you received a tax deduction on the original contribution. This is the same tax treatment as regular IRA or 401(k) withdrawals. Keep in mind that annuity income can push you into a higher tax bracket and may affect the taxation of your Social Security benefits. Consult a tax advisor to model the full impact on your retirement tax picture.

Why Comparing Quotes Is Essential

Annuity payout rates are not standardized across the industry. Each insurance company sets its own rates based on its investment portfolio performance, mortality assumptions, expenses, and profit targets. The result is that quotes for the same age, premium, and payout type can vary dramatically from one carrier to another.

For a 65-year-old male investing $100,000 in a life-only SPIA, one carrier might offer $570 per month while another offers $625 per month. That $55 per month difference equals $660 per year and $13,200 over 20 years of retirement. For a $500,000 premium, the difference between carriers can exceed $200 per month or $48,000 over 20 years. These are significant amounts that can meaningfully affect your retirement standard of living.

When comparing quotes, ensure you evaluate the financial strength of each carrier. The highest payout is not always the best choice if it comes from a company with weak financials. Look for carriers rated A or higher by A.M. Best. An independent insurance agent or financial advisor who works with multiple carriers can streamline the comparison process and help you identify the best combination of payout rate and insurer strength. For a broader perspective on evaluating annuities, see our analysis of whether annuities are worth it.

The Bottom Line

How much your annuity will pay depends on the interplay of your premium amount, your age, your gender, prevailing interest rates, and the payout option you select. Life-only payouts provide the highest monthly income, while period certain, joint life, and refund options reduce your payment in exchange for additional protections. Deferred income annuities can dramatically increase your eventual payout by allowing your premium to accumulate over time.

The current interest rate environment in 2026 is favorable for annuity buyers, with payouts at levels not seen in years. If you are considering an annuity, take the time to estimate the income you need, choose the right payout option for your situation, and obtain quotes from multiple carriers to find the most competitive rate. Consider whether an inflation rider is appropriate given your life expectancy and other income sources.

Annuity income calculations can be complex, and the right amount to invest in an annuity depends on your complete financial picture, including your other income sources, expenses, tax situation, health, and goals. Consult a qualified financial advisor who can run personalized projections and help you determine whether an annuity belongs in your retirement income plan and, if so, how much to allocate and which payout option to choose.