Key Takeaways
- A $300,000 annuity could pay $1,834 a month or $22,008 a year for a 65-year-old woman purchasing an immediate single life annuity.
- Several variables factor into the calculation of annuity payouts, including the type of annuity, the payout period and the annuitant’s life expectancy.
- Younger people tend to get lower monthly payouts, and because women have longer life expectancies than men, they have lower payouts.
These estimates are for a single premium immediate $300,000 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 female and male spouse assume that both spouses are the same age and that payments remain level if either spouse is alive.
Monthly Payouts for $300,000 Immediate Lifetime Annuity
| Age | 55 | 60 | 65 | 70 | 75 | 80 |
| Male Single Life | $1,623 | $1,750 | $1,924 | $2,176 | $2,548 | $3,130 |
| Female Single Life | $1,575 | $1,686 | $1,834 | $2,046 | $2,363 | $2,861 |
| Joint Life | $1,467 | $1,544 | $1,654 | $1,810 | $2,038 | $2,394 |
Annual Payouts for $300,000 Immediate Lifetime Annuity
| Age | 55 | 60 | 65 | 70 | 75 | 80 |
| Male Single Life | $19,476 | $21,000 | $23,088 | $26,112 | $30,576 | $37,560 |
| Female Single Life | $18,900 | $20,232 | $22,008 | $24,552 | $28,356 | $34,332 |
| Joint Life | $17,604 | $18,528 | $19,848 | $21,720 | $24,456 | $28,728 |
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Case Studies
To understand how different factors impact the approximate payout of a $300,000 annuity, take a look at three different case studies. These hypothetical estimates will give you a general idea of how different customers might receive different payouts for the same premium amount.
We calculated these payout estimates using Cannex data.
Scenario 1 – Carmen
Name: Carmen
Age: 65
Looking to Invest: $300,000
- Carmen wants protection against the risk of outliving her savings in retirement.
- She purchases a $300,000 immediate annuity with a lifetime payout.
Monthly Payout: $1,834
In this example, Carmen has recently retired and wants to set up a stream of income to cover her essential needs now that she’s not working. An immediate annuity converts her $300,000 premium into $1,834 a month, or $22,008 a year.
This estimation assumes that Carmen’s annuity is a single life only payout with no period certain or death benefit. If Carmen passes away before receiving the full value of her annuity premium, the remaining value of the annuity will not pass to her beneficiaries but be absorbed by the insurance company.
Scenario 2 – Richard
Name: Richard
Age: 73
Looking to Invest: $300,000
- Richard wants to create a guaranteed income stream for the rest of his life.
- He purchases an immediate lifetime income annuity.
Monthly payout: $2,324
Like Carmen, Richard purchases a $300,000 immediate annuity to create guaranteed income for life. However, Richard would receive $2,324 a month, or $27,888 a year, from his $300,000 immediate annuity. Why are Richard’s payments almost $500 higher than Carmen’s?
Annuity companies calculate payouts based on the annuitant’s life expectancy. The longer the company expects you to live, the longer they have to pay out a lifetime annuity, so the company will lower the payment amounts to compensate.
Because Richard is older than Carmen, his payments will be higher. Gender also factors into life expectancy, as women tend to live longer than men. Richard’s payments are higher than what a woman his age would receive. A 73-year-old woman could receive a monthly payout of $2,167 a month for a $300,000 immediate annuity.
Scenario 3 – Sydney
Name: Sydney
Age: 75
Looking to Invest: $300,000
- Sydney wants guaranteed income for life and wants that income to go to her beneficiary if she passes away earlier than anticipated.
- She purchases a $300,000 immediate life annuity with a 10-year period certain.
Monthly payout: $2,194
Sydney purchases her annuity with two goals in mind: generating income she can’t outlive and leaving behind an income stream for her beneficiary if she passes away in the next few years. With a 10-year period certain annuity, Sydney receives $2,194 a month. If she dies within 10 years of purchasing the annuity, the remaining payments for that 10-year period will go to her beneficiary.
The 10-year period certain guarantee means that the minimum payout from Sydney’s annuity is $263,280. An annuity with period certain represents greater risk to the annuity company because they will have to keep paying income for that period even if the annuitant dies. As such, adding a period certain guarantee reduces the payout amount.
If Sydney purchased a $300,000 single life annuity with no period certain guarantee, she could receive as much as $2,305 in monthly payments, or $27,660 a year.
Factors Impacting How Much a $300,000 Annuity Pays per Month
Several factors can influence the payout of an annuity.
Payout Factors for Annuities
- Annuitant’s life expectancy: The age and sex of the contract’s annuitant play a major role in payout calculations because insurance companies use this information to determine life expectancy. The longer you’re expected to live, the lower your payments will be, so women and younger people tend to receive lower monthly payouts.
- Payout period: The insurance company also factors in any guarantees in the contract for how long payments must continue. For example, a single life annuity will have higher payments than a joint life annuity that covers two people’s lifetimes.
- Type of annuity: Immediate annuities are the simplest type of annuity and therefore have the most predictable payouts. Most other types of annuities undergo an accumulation phase before converting to income, making returns more difficult to calculate in advance.
- Riders: A key advantage of annuities is the ability to customize a contract with riders at an additional cost. Riders like a return of premium or cost of living adjustment rider influence the annuity’s payout, as these represent additional risk to the annuity issuer.
The premium amount is one of the most important elements, as it’s usually the starting point of any annuity calculation. However, even annuities with the same premium amount can have very different monthly payouts, as the case study scenarios show.
Editor Norah Layne contributed to this article.
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