Key Takeaways
- A $400,000 life-only income annuity will pay $2,393 per month or $28,716 per year for a 65-year-old woman buying an immediate annuity.
- Payouts are influenced by various factors, including annuity type, age, life expectancy, market conditions and payment options.
- Immediate Income Annuities begin payouts within 12 months, turning a lump sum into regular payments. Deferred income annuities start payments after one year and can be funded over time.
Annuity.org sourced the latest payout data from Cannex to provide accurate, current figures for a $400,000 income annuity. All estimates are for lifetime income annuities but may include different ages or guaranteed payout options to show different scenarios that might be common to the variety of retirees who search for annuity products. To research current payouts based on your specific needs, please visit our income annuity calculator.
My clients buy an annuity with an income rider to give themselves a predictable income in their retirement years. It also allows them to plan their own retirement, as they can calculate the rider benefit and guarantee it at the time they buy the product, knowing with certainty what that monthly number will be. They don’t want risk or market fluctuations to change that number. I have actually done this for myself where when I did my planning with my advisor. I told him how much income I will need at age 67 and that I would need an income stream to supplement that and reach my monthly income goal. He told me how much I needed to invest now to reach that number at age 67. I bought an index annuity with a LIBR and know today what my income will be from this investment at age 67. It helps me plan better for myself.
Aamir M. Chalisa, MBA, LUTCF, MDRTGeneral Manager at Futurity First Insurance GroupAamir M. Chalisa is the GM at Futurity First, leading Oak Brook’s top branch. With 30+ years’ expertise, chairs GAMA Global, driving diversity worldwide.
Understanding Monthly and Annual Payouts for a $400,000 Guaranteed Lifetime Annuity
When planning for retirement, a guaranteed lifetime annuity can provide financial security and peace of mind. This type of annuity ensures that you receive regular payments for the rest of your life, regardless of how long you live. The tables below illustrate the monthly and annual percentage payouts for a $400,000 guaranteed lifetime annuity based on various ages and life scenarios. Understanding these payouts can help you make informed decisions about your retirement strategy, ensuring that you can meet your financial needs throughout your golden years.
Monthly Payouts for $400,000 Guaranteed Lifetime Annuity
| Age | Male | Female | Joint Life |
| 60 | $2,287 | $2,196 | $2,010 |
| 65 | $2,516 | $2,393 | $2,156 |
| 70 | $2,838 | $2,674 | $2,364 |
| 75 | $3,315 | $3,088 | $2,659 |
| 80 | $4,084 | $3,744 | $3,115 |
Annual Percentage* Payouts for $400,000 Guaranteed Lifetime Annuity
| Age | Male | Female | Joint Life |
| 60 | 6.86% | 6.59% | 6.03% |
| 65 | 7.55% | 7.18% | 6.47% |
| 70 | 8.51% | 8.02% | 7.09% |
| 75 | 9.95% | 9.26% | 7.98% |
| 80 | 12.25% | 11.23% | 9.35% |
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Case Studies
Understanding how annuities play a role within a financial plan can be more illustrative than a simple quote. Investors face various challenges as they prepare for retirement. Below are three scenarios that demonstrate how income annuities can fill an income need while minimizing the risk of outliving that income.
Annuity payout estimates were generated using data from Cannex and our income annuity calculator.
Scenario 1
- Name: Diego
- Age: 55
- Income Start Age: 65
- Investment Amount: $400,000
- Goal #1: Create a guaranteed income source that will begin at retirement in 10 years
- Goal #2: Avoid market risk in these last 10 years
| Payout Option | Life with 20 year certain |
| Monthly Income | $3,654 |
| Payout Percentage | 10.96% |
| Minimum Payout | $876,960 |
Diego wants to lock in a guaranteed rate of return and lifetime income payout for when he retires in 10 years at age 65. Choosing a deferred income annuity allows him to predict what his expected income will be in the future.
Based on Diego’s life expectancy, he can select a 20 year payment guarantee for only slightly less than the life-only payout. This allows him to receive reliable income without the concern that his heirs might miss out on the proceeds of the annuity if he were to pass away prematurely. The total amount he or his heirs will receive from this annuity is $876,960 or more depending on how long he lives.
Scenario 2
- Name: Carol
- Age: 65
- Income Start Age: 65
- Investment Amount: $400,000
- Goal #1: Retire today and maximize her income for 10 years
- Goal #2: Avoid money management responsibilities
| Payout Option | 10 year period certain only |
| Monthly Income | $4,077 |
| Payout Percentage | 12.23% |
| Minimum Payout | $489,260 |
Carol would like to maximize her income over the next 10 years in order to travel and spend time with her family. Carol expects that her life expectancy will not exceed 10 years time due to declining health. She has ample life insurance which she plans to maintain to create a legacy for her family.
By selecting a 10 year period certain annuity, her heirs will receive more than her principal contribution over the next 10 years. Her annuity will provide her automated income that will not require any management so she can focus on her retirement priorities.
Scenario 3
- Names: Robert & Leslie
- Ages: 70
- Income Start Age: 80
- Investment Amount: $400,000
- Goal #1: Create a stream of income to support them in their old age that won’t expire
- Goal #2: Provide a potential legacy for their child Amy
| Payout Option | Joint Life with 10 year certain |
| Monthly Income | $4,941 |
| Payout Percentage | 14.82% |
| Minimum Payout | $592,920 |
Robert and Leslie are creating an income stream that will kick in at age 80 to help support them in their old age as well as offset the rising cost of living that they expect to incur in the future. Because they aren’t sure they will be alive to receive some or all of the payments, they select a 10 year payment guarantee to ensure that their daughter Amy can utilize the assets if they do not.
This joint life annuity will protect both Robert and Leslie equally. Even if one of them passes away, the other will still receive the full monthly payment for as long as they live. If both pass away before 10 years of payments have been made, then Amy will receive the remainder of the 10 year guarantee.
Factors Impacting How Much a $400,000 Annuity Pays per Month
The payouts offered by annuity companies will be calculated based on several factors in each individual annuity contract. The individual quote you receive on your $400,000 income annuity may differ based on one or all of the following information. It is important to explore many products from various companies to find the type of contract that will meet your needs.
- Owner’s Age: The older the owner of the annuity contract is, the greater the payment will be. Life expectancy is one of the most important factors in determining an annuity’s payout.
- Owner’s Gender: Women have, on average, a longer life expectancy than men. Therefore, their payouts are smaller than those for men of a similar age.
- Type of Annuity: An immediate income annuity will have a smaller payout compared to a deferred income annuity, which will begin payouts later.
- Expected Payout Period: An older individual will have a shorter payout period (life expectancy) than a younger person. Guaranteed payout periods, such as a 10-year period certain will translate into a lower payment than a life-only income annuity. Similarly, a joint annuity will be expected to have a longer payout period than a single-life annuity.
- Optional Riders: Riders such as return of premium, period certain or a guaranteed death benefit will reduce the payout amount compared to a life-only annuity.
- Market Environment: The prevailing interest rate environment can impact payout rates for annuities. Lower interest rates, especially over a long period of time, mean insurance companies expect to earn less on their investments. Therefore, insurers must pay less relative to periods of time with higher interest rates.
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