What Is the Minimum Annuity Investment Amount?

Most annuities don’t have a fixed legal minimum, but insurers typically set practical starting amounts. In real terms, many people can buy an annuity with as little as $5,000, while others invest six figures to create reliable retirement income.

What matters most isn’t the minimum — it’s how much income you want the annuity to generate and how long you need that income to last.

Typical Annuity Investment Amounts

Annuity minimums vary by product type. Here’s what insurers commonly require to get started and what those amounts are designed to do.

Annuity Type	Common Starting Amount	What This Means
Fixed annuity	~$5,000	Entry-level option for conservative growth
Fixed indexed annuity	~$5,000–$10,000	Growth tied to a market index, without direct market risk
Immediate annuity	~$25,000	Converts savings into income right away
Deferred income annuity	~$10,000–$25,000	Income begins later, often at retirement
Average U.S. annuity purchase	~$150,000	Typical behavior, not a requirement

In the case of deferred annuities, the minimums are often lower and, at times, comparable to the minimums of CDs or individual fixed income bonds—common alternatives for conservative or guaranteed investments. Different companies establish different minimums, so if you have a limited amount to invest, it’s advisable to shop around and find a company that can accommodate your investment.

Stephen Kates, CFP®Principal Financial Analyst for Annuity.org

Stephen Kates, CFP® is a personal finance expert specializing in financial planning and education. He serves as the Principal Financial Analyst for Annuity.org, where he delves into industry trends to support consumers and financial advisors on wealth management, annuities, retirement planning, and investing.

What Actually Determines How Much You Need

Before you can estimate how much money you’ll need, it’s important to understand what actually drives that number. There isn’t a one-size-fits-all amount, because annuity income is based on several personal and economic factors working together. How much income you want, when you start taking payments, and the broader interest rate environment all play a role in determining how much you may need to invest.

Annuity Type Changes the Math

Some annuities focus on growth first, while others focus on income now. The structure determines how efficiently your money turns into payments.

How Annuity Minimums Really Work Minimum Investment
The lowest amount an insurer allows to open a contract. This is a product rule, not a legal requirement.

Average Purchase Amount
What many buyers choose to invest in, often based on retirement savings size, is not a recommendation.

Ideal Investment Amount
The amount that meets your personal income goal while fitting into your broader retirement plan.

What Different Buyers Might Need

Scenario 1: Supplementing Social Security
A retiree who already receives Social Security may find that their monthly benefit covers housing but falls short on everyday living costs like groceries, utilities and insurance. To close that gap, they might use part of their savings to buy an annuity designed to generate about $800 per month in guaranteed income. Because the annuity is only covering essential expenses, the investment doesn’t need to consume all their retirement assets, leaving the rest available for emergencies, travel or legacy goals.

Why this approach works: It creates predictable income for basic expenses while preserving flexibility elsewhere in the retirement plan.

Scenario 2: Guaranteed Lifetime Income
Someone retiring without a traditional pension may worry about outliving their savings. In this case, they might invest a larger lump sum into an annuity that provides income for life, effectively creating a personal pension. The goal isn’t just higher income, but certainty — knowing that no matter how long they live or how markets perform, a portion of their retirement income is guaranteed.

Why this approach works: It transfers longevity risk from the retiree to the insurance company and helps stabilize overall retirement income.

Scenario 3: Conservative Growth First
A pre-retiree who is still several years away from needing income may prioritize protecting principal while allowing their money to grow. They might start with a smaller investment in a fixed or fixed indexed annuity to earn interest without direct exposure to market losses. Later, once retirement approaches, that annuity can be converted into an income stream or combined with other income sources.

Why this approach works: It balances growth and safety, allowing the investor to ease into retirement planning without committing a large amount upfront.

These examples show why there’s no single “right” annuity investment amount — the appropriate size depends on the role the annuity plays in your overall retirement strategy.

Pros and Cons of Investing More vs. Less

A Simple Rule of Thumb

If the annuity income doesn’t meaningfully improve your retirement security, you may not be investing enough — or an annuity may not be the right tool for that goal.

Annuities work best when they clearly solve a problem, such as covering essential expenses or creating predictable lifetime income.

Using a Calculator to Find Your Number

Because annuity payouts depend on age, rates and product type, annuity calculators can help estimate how much income different investment amounts may produce.

Rather than asking “What’s the minimum?”, the better question is: “How much income do I want this annuity to provide?”

There’s no universal amount of money you need to buy an annuity. Some people start with a few thousand dollars, while others invest six figures to create lifetime income. The right amount depends on your goals, age, interest rates and the role the annuity plays in your retirement plan.

When an annuity is sized correctly, it doesn’t just meet a minimum; it delivers peace of mind.