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  • Written By
    Jennifer Schell

    Jennifer Schell

    Financial Writer

    Jennifer Schell joined Annuity.org in 2022. She is a professional writer with more than three years of experience creating content for a variety of industries ranging from travel to tax accounting. She combines her strong writing skills and her passion for educating others to write engaging and informative financial content for Annuity.org.

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  • Edited By
    Savannah Hanson
    Savannah Hanson, financial editor for Annuity.org

    Savannah Hanson

    Financial Editor

    Savannah Hanson is an accomplished writer, editor and content marketer. She joined Annuity.org as a financial editor in 2021 and uses her passion for educating readers on complex topics to guide visitors toward the path of financial literacy.

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  • Updated: September 13, 2022
  • This page features 1 Cited Research Article
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How to Cite Annuity.org's Article

APA Schell, J. (2022, September 13). Immediate Annuity Calculator. Annuity.org. Retrieved September 22, 2022, from https://www.annuity.org/annuities/immediate/annuity-calculator/

MLA Schell, Jennifer. "Immediate Annuity Calculator." Annuity.org, 13 Sep 2022, https://www.annuity.org/annuities/immediate/annuity-calculator/.

Chicago Schell, Jennifer. "Immediate Annuity Calculator." Annuity.org. Last modified September 13, 2022. https://www.annuity.org/annuities/immediate/annuity-calculator/.

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Why You Can Trust Annuity.org
Annuity.org has provided reliable, accurate financial information to consumers since 2013. We adhere to ethical journalism practices, including presenting honest, unbiased information that follows Associated Press style guidelines and reporting facts from reliable, attributed sources. Our objective is to deliver the most comprehensive explanation of annuities and financial literacy topics using plain, straightforward language.

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We pride ourselves on partnering with professionals like those from Senior Market Sales (SMS) — a market leader with over 30 years of experience in the insurance industry — who offer personalized retirement solutions for consumers across the country. Our relationships with partners including SMS and Insuractive, the company’s consumer-facing branch, allow us to facilitate the sale of annuities and other retirement-oriented financial products to consumers who are looking to purchase safe and reliable solutions to fill gaps in their retirement income. We are compensated when we produce legitimate inquiries, and that compensation helps make Annuity.org an even stronger resource for our audience. We may also, at times, sell lead data to partners in our network in order to best connect consumers to the information they request. Readers are in no way obligated to use our partners’ services to access the free resources on Annuity.org.

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Our vision is to provide users with the highest quality information possible about their financial options and empower them to make informed decisions based on their unique needs.

What Can Our Immediate Annuity Calculator Tell You?

Use this immediate annuity calculator to estimate how much an annuity would pay out each month. To do so, the calculator needs information such as your age and how much you expect to put down for a premium on the annuity.

Immediate annuities skip the accumulation phase that most annuities use to grow the starting premium balance. Instead, this type of annuity immediately converts your single lump-sum premium into a stream of income payments within a year of purchase.

For people nearing retirement age, immediate annuities can be a helpful supplement to other retirement savings vehicles. Payments generated from this type of annuity are guaranteed for your lifetime, so you can’t outlive them.

To find out how much you could receive from an immediate annuity, simply enter your information in the box above. You’ll need the dollar amount of your premium, which must be paid in a single lump sum. You’ll also enter your age and gender to determine your life expectancy, a key element in annuity income calculations.

How Do You Calculate Annuity Payments?

Calculating annuity payments can be tricky because insurance companies have the authority to set their own rates and contract terms.

To get the best result from an annuity calculator, it helps to know the average annuity rates for the type of annuity you plan to buy. There are several variables that go into calculating annuity payments, including:

Annuity Payment Variables
  • PO = Principal
  • r = Annual interest rate
  • n = Number of payments per year
  • t = Number of years of payments

Interest rates will vary depending on the type of annuity and the provider. You can customize the number of payments per year in your contract, but most annuitants receive payouts once per month or 12 times per year.

The formula for calculating an annuity payout looks something like this:

Payout Annuity Formula

How Much Do Annuities Typically Pay Out Per Month?

To find out how much annuities typically pay out per month, let’s look at two examples. In each example, we’ll plug in the terms of the annuity to the formula shown above to calculate what a typical monthly payment might be.

Example 1: How Much Does a $100,000 Annuity Pay Per Month?

For this example, we’ll calculate the payouts for a 20-year fixed annuity with a $100,000 principal and a 2% annual growth rate.

Payout Annuity Formula Example

Thus, at a 2% growth rate, a $100,000 annuity pays $505.88 per month for 20 years.

This example doesn’t include all the possible variables of individual annuity contracts, but having a firm grasp on this basic formula will make you more confident going into a discussion with a financial planner or insurance agent.

Wendy Swanson, Retirement Income Certified Professional™, explains how to estimate how much monthly income you might receive from an annuity over time.

Example 2: How Much Does a $500,000 MYGA Pay Per Month?

For a $500,000 multi-year guaranteed annuity (MYGA) with a 2.85% interest rate, the monthly payments for a 10-year period would be approximately $4,795.

Because MYGAs have fixed rates for a set number of years, we used the same formula in this example, but we plugged in different numbers for the principal (500,000), interest rate (2.85) and the number of years (10).

Again, we haven’t taken contract specifics, such as gender or additional riders, into account because we don’t know exactly how the insurance company will weigh these. We do know, however, that women generally receive lower payments than men do because women have longer lifespans and that riders add to the price of an annuity.

How Much Income Do I Need To Retire?

When you’re planning for retirement, it’s important to have a good idea of how much income you’ll need while you’re not working and where that money will come from. The first step is making a retirement budget to better understand what your financial needs will look like.

To make a retirement budget, you’ll need to identify what your expenses and income will look like in retirement. After comparing your expenses to your income, you can determine whether you’ll need to adjust your spending or find other sources of retirement income.

This process is like building a normal budget, but there are some other factors to consider when budgeting for retirement. You’ll have to account for things like inflation, which can reduce the purchasing power of your savings, or changes in Social Security benefits.

You should also consider that your expenses now may not be the same as your expenses at retirement. For example, older Americans ‌spend more on health care costs than younger people do. Retirees may also need to pay for long-term care or financially support their adult children or grandchildren.

Frequently Asked Questions

What is an annuity?
An annuity is an insurance product that converts a premium into a stream of guaranteed lifetime income. Annuities provide modest growth along with principal protection and are often used to supplement retirement savings.
How do I determine how much income I will need in retirement?
To determine how much income you will need in retirement, you’ll need to build a retirement-focused budget. Identify expenses and sources of income and adjust your spending as needed.
How much do annuities pay out in retirement?
Annuity payments vary depending on the interest rates, the size of the premium and the annuitant’s life expectancy. Using an annuity calculator can give you an estimate of what your monthly payments might be.
Please seek the advice of a qualified professional before making financial decisions.
Last Modified: September 13, 2022

1 Cited Research Article

Annuity.org writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.

  1. Lumen Learning. (n.d.). Payout Annuities: Mathematics for Liberal Arts. Retrieved from https://www.coursehero.com/study-guides/math4libarts/payout-annuities/