How Much Does a $500,000 Annuity Pay Per Month?

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 of a $500,000 annuity.

The estimates shown are for an immediate $500,000 annuity with lifetime 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.

By examining this data, you’ll gain a better understanding of your potential annuity payments. These insights are crucial for anyone looking to integrate a $500,000 annuity into their long-term retirement planning.

Key Facts About What a $500,000 Annuity Pays

1. 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.
2. 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.
3. The older you are when you start to receive payments, the larger those payments will be. Men’s payments will be larger than women’s because women live longer.

The chart below provides a detailed breakdown of estimated payouts for a $500,000 annuity under different scenarios, offering a clearer comparison of your options.

Monthly Payouts for $500,000 Immediate Life Annuity

Age	Male	Female	Joint Life
60	$2,953	$2,862	$2,632
65	$3,237	$3,103	$2,808
70	$3,655	$3,455	$3,062
75	$4,269	$3,967	$3,420
80	$5,240	$4,802	$4,003

Annual Percentage* Payouts for $500,000 Immediate Lifetime Annuity

Age	Male	Female	Joint Life
60	7.09%	6.87%	6.32%
65	7.77%	7.45%	6.74%
70	8.77%	8.29%	7.35%
75	10.25%	9.52%	8.21%
80	12.58%	11.52%	9.61%

Income annuities are popular for providing predictable retirement income. Payment calculations depend on factors like gender, age, time frame, and the product vehicle. For example, a $500K annuity provides $2,997 per month to a 65-year-old woman. Older individuals and married couples receive more or less based on life expectancy and shared income. Annuities offer a safe way to secure predictable income in retirement.

Aamir M. Chalisa, MBA, LUTCF, MDRTGeneral Manager at Futurity First Insurance Group

Aamir M. Chalisa is the GM at Futurity First, leading Oak Brook’s top branch. With 30+ years’ expertise, chairs GAMA Global, driving diversity worldwide.

Case Studies

To understand how different factors impact the approximate payout of a $500,000 annuity, let’s look at three scenarios. These case studies represent hypothetical estimates and are meant to give you a general idea of how different customers might receive different payouts for the same premium amount.

These payout estimates were calculated using Cannex data.

Scenario 1 – Ted

In this scenario, retiree Ted wants to set up a guaranteed income stream he can’t outlive. An immediate annuity converts his $500,000 into payments of $4,269 each month, or $51,228 a year.

This calculation assumes that Ted chose a single-life policy, which continues payments until his death and has no death benefit. If Ted passes away before he receives the full return of his annuity premium, his beneficiaries will not receive the remaining amount of the annuity payments.

Scenario 2 – Ella

Like Ted, Ella purchases a $500,000 immediate annuity with a lifetime payout. However, Ella’s estimated monthly payment is more than $1,000 less than Ted’s. Why is this?

Ella receives lower monthly payments from her annuity for two reasons, and they both come down to the fact that annuity payment calculations are based in part on the annuitant’s life expectancy. Because Ella is 10 years younger than Ted, the insurance company predicts that she’ll receive more payments over her lifetime, so payment amounts are lower. 

Ella’s gender is also a factor in this because women tend to live longer than men. As a result, Ella’s payments are slightly lower; a 65-year-old man would receive roughly $3,103 per month or $37,236 a year from a $500,000 immediate lifetime annuity.

Scenario 3 – Irene

Irene wants a guaranteed income stream for life, but she also wants assurance that her annuity will pay out to her beneficiary if she passes away before receiving the full value of her annuity. So, Irene purchases a lifetime annuity with a 20-year period certain; if Irene passes away before the 20 years have elapsed, her beneficiary will receive the same monthly payments until the end of that period.

Irene’s $500,000 annuity pays approximately $2,788 per month, or $33,456 a year. Though she is the same age and gender as Ella in the previous example, Irene’s payout is lower because she added the period certain rider. This provision represents an extra risk for the insurer, so the provider reduces Irene’s monthly payments to offset that risk.

Factors Impacting How Much a $500,000 Annuity Pays Per Month

Annuity providers calculate payouts differently for every annuity contract. An annuity with a $500,000 premium can have widely varying monthly payments depending on several factors.

• Annuitant’s age: Life expectancy factors into annuity payout calculations because the more years you live after you start receiving payments, the more payments you’ll receive. This means younger people tend to have lower payouts.
• Annuitant’s gender: On a similar note, women tend to have a higher life expectancy than men, so a woman’s annuity payout will be lower than a man’s of the same age.
• Payout period: You can choose an annuity that pays out for a certain number of years, for life, or even your and your spouse’s lives. The longer you’re expected to receive payments, the smaller the payment amount will be. A $500,000 straight life annuity will have a higher payout than a life with period certain or a joint and survivor annuity of the same premium amount. 
• Type of annuity: Immediate annuities are the easiest payments to calculate because they begin paying out right away. If you purchase a $500,000 deferred annuity with an interest rate, the value the annuity accumulates before it converts to income will factor into how much you’ll receive when the contract pays out.
• Riders: Annuity owners can customize their contracts with riders and provisions, like a death benefit or return of premium rider. However, these add-ons often come at a cost and can result in a lower monthly payment.