Key Takeaways
- A $250,000 immediate annuity could pay as much as $1,528 a month or $18,336 a year for a 65-year-old woman.
- Annuity companies take multiple factors into account when calculating the payout of a $250,000 annuity, including the annuitant’s age and gender and the start and duration of payments.
- Some annuities accumulate value before converting to income, therefore the type of annuity you purchase can also affect payout amounts.
The estimates here are for an immediate $250,000 annuity with lifetime payments. Annuity.org used data from Cannex, an independent company that provides access to a database of updated annuity products, to calculate the expected monthly payments.
The payouts listed for a joint annuity with a male and female spouse assume that both spouses are the same age and that payments remain level if either spouse is alive.
Monthly Payouts for $250,000 Immediate Lifetime Annuity
| Age | 55 | 60 | 65 | 70 | 75 | 80 |
| Male Single Life | $1,352 | $1,458 | $1,603 | $1,813 | $2,123 | $2,608 |
| Female Single Life | $1,312 | $1,405 | $1,528 | $1,705 | $1,969 | $2,384 |
| Joint Life | $1,222 | $1,286 | $1,378 | $1,508 | $1,698 | $1,994 |
Annual Payouts for $250,000 Immediate Lifetime Annuity
| Age | 55 | 60 | 65 | 70 | 75 | 80 |
| Male Single Life | $16,224 | $17,496 | $19,236 | $21,756 | $25,476 | $31,308 |
| Female Single Life | $15,744 | $16,860 | $18,336 | $20,460 | $23,628 | $28,608 |
| Joint Life | $14,664 | $15,432 | $16,536 | $18,096 | $20,376 | $23,928 |
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Case Studies
The following three scenarios illustrate how different factors influence the payout of a $250,000 annuity. These case studies use hypothetical estimates to give you a general idea of how different customers might receive different payouts for the same premium amount.
We used Cannex data to calculate these payout estimates.
Scenario 1 – Ellie
Name: Ellie
Age: 65
Looking to invest: $250,000
- Ellie wants guaranteed income she can’t outlive.
- She purchases an immediate annuity with a single life payout.
Monthly payout: $1,528
In this case study, Ellie has recently retired and has concerns about outliving her savings. By purchasing a $250,000 immediate single life annuity, Ellie could receive monthly payouts of $1,528 a month, or $18,336 a year.
Ellie’s immediate annuity has no period certain guarantee. If she passes away before receiving the full return of her premium, no remaining payments will go to her beneficiary.
Scenario 2 – Nate
Name: Nate
Age: 68
Looking to Invest: $250,000
- Nate wants a guaranteed income stream in retirement.
- He purchases an immediate annuity with a lifetime payout.
Monthly payout: $1,718
Retiree Nate purchases the same $250,000 immediate annuity as Ellie but receives $1,718 in monthly payments. Why is Nate’s payout so much higher than Ellie’s if they both invested the same premium amount?
Aside from the premium amount, the most important factor in calculating an annuity’s monthly payouts is the annuitant’s life expectancy. The longer your remaining life expectancy, the lower your payouts will be each month, because the insurance company expects to have to pay you for longer.
Nate’s payments are higher than Ellie’s because he has a shorter remaining life expectancy. The older you are, the higher your payout will be each month.
Nate’s gender also plays a role in his higher payouts because men have a lower life expectancy than women. A 68-year-old woman purchasing a $250,000 annuity could receive payouts of $1,624 a month or $19,488 a year.
Scenario 3 – Janelle and Victor
Names: Janelle and Victor
Ages: 70 and 72
Looking to Invest: $250,000
- Janelle and Victor want to ensure that neither of them outlives their retirement savings.
- They purchase a joint life annuity that guarantees payments for both of their lifetimes.
Monthly payout: $1,535
Janelle and Victor purchased a joint and survivor annuity, which guarantees payments for the rest of both of their lives. Their $250,000 immediate annuity generates $1,535 in monthly payments, or $18,420 a year.
Though they are a few years older than Nate, Janelle and Victor’s annuity pays significantly less each month. Because the annuity’s payment guarantee extends to two lifetimes, the insurance company expects to have to make payments for longer than a single life annuity. Therefore, the payouts from joint life annuities are significantly lower than what a single life annuity would pay.
Factors Impacting How Much a $250,000 Annuity Pays per Month
Annuity companies calculate payouts differently for every annuity contract.
Annuity Payout Factors
- Annuitant’s life expectancy: The person whose life expectancy determines an annuity’s payout is called the annuitant. The longer the insurance company expects an annuitant to live, the longer they have to pay out a lifetime annuity, so payments will be lower. This is why men and older people typically receive the highest monthly payments.
- Payout option: Lifetime annuities are popular, but they aren’t the only payout option for an annuity. You could opt to have an annuity pay out for a certain number of years; if that amount of time is less than the annuitant’s life expectancy, then the monthly payments might be higher than a lifetime annuity.
- Type of annuity: The payout calculations on this page assume that the customers are purchasing immediate annuities, but there are many other types of annuities to choose from. Most non-immediate annuities accumulate interest before converting into income payments, so the payout amounts for these products can be harder to predict.
- Riders: When you purchase an annuity, you can customize the contract with riders for an additional fee. The amount of your payouts can change depending on certain riders, such as a cost of living rider that increases the monthly payments by a small percentage each year to offset inflation.
The scenarios above illustrate some of the ways these factors influence the monthly payout of a $250,000 annuity.
Editor Norah Layne contributed to this article.
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