Free immediate annuity calculator. Estimate monthly income from a single premium immediate annuity (SPIA). Compare payouts by age, gender, and joint-life options.
The Immediate Annuity Calculator estimates how much guaranteed monthly income you can receive from a single premium immediate annuity (SPIA). Unlike fixed-term annuities, immediate annuities pay for life — the amount depends on your age, the premium paid, and the interest rate environment.
Immediate annuities are insurance products that convert a lump sum into guaranteed lifetime income starting within 30 days of purchase. They solve the biggest retirement risk: outliving your money. This calculator models the payout using actuarial life expectancy.
Compare life-only payouts (highest income), period-certain options, and joint-life options for couples. A 65-year-old investing $300,000 in a life-only SPIA might receive roughly $1,800 to $2,000 per month depending on interest rates — significantly more than most systematic withdrawal strategies would produce. The trade-off is that a life-only annuity stops at death with no residual value, while period-certain and joint-life options reduce the payout in exchange for estate or survivor protection.
An immediate annuity provides certainty that you'll never run out of money. This calculator helps you estimate payouts before contacting insurance companies, so you can shop smart and know what to expect. Understanding the income difference between life-only and joint-life options — which can be 15 to 25 percent — is critical for couples planning together.
Life Annuity PMT ≈ Premium × r / (1 − (1 + r)^−LE) where LE = life expectancy from actuarial tables, r = periodic rate Joint Life uses combined life expectancy (longer of two lives) Period Certain uses the guaranteed period for payment count
Result: $1,873/month ($22,474/year) life-only
A 65-year-old purchasing a $300,000 immediate annuity at 5% receives approximately $1,873/month for life. If they live to 87 (22 years), total income would be $494,419 — 65% more than the premium paid.
Insurance companies use actuarial tables to price annuities. A 65-year-old has roughly 22 years of life expectancy, but some will live to 100+. The insurer pools this risk: those who die earlier effectively subsidize payments to those who live longer. This "mortality credit" is why life annuities pay more than systematic withdrawals at the same rate.
Rather than buying one large annuity, consider purchasing smaller annuities over several years. This spreads interest rate risk (capturing different rate environments) and lets you adjust your strategy as needs change. A typical ladder might buy annuities at ages 65, 68, and 71.
A 4% withdrawal from a $300,000 portfolio gives $12,000/year — but that income isn't guaranteed and the portfolio may run out. The same amount in a SPIA might give $22,000+/year guaranteed for life — nearly twice as much — though you lose access to the principal and legacy value.
A SPIA is an insurance product where you make one lump-sum payment and receive guaranteed monthly income starting almost immediately. "Single premium" means one payment in; "immediate" means payouts begin within 30 days. The income is guaranteed for life or a set period.
With a life-only annuity: nothing — payments stop and the insurer keeps the remaining balance. With a period-certain option: if you die before the guaranteed period ends, your beneficiary receives payments for the remaining term. With a cash refund option: your heirs receive the difference between premium paid and total payments received.
Insurance companies base payouts on: (1) current interest rates (higher rates = higher payments), (2) your age (older = higher payments due to shorter life expectancy), (3) gender (women live longer, so receive slightly less), and (4) the payout option chosen (life-only pays most). Shopping multiple insurers is important because payout rates can vary by 10-15% for identical premium amounts and terms.
Generally no. Once you purchase a SPIA, the decision is irreversible. Some contracts offer a small free-look period (typically 10-30 days). After that, you cannot get your lump sum back. This is why it's important to only annuitize what you truly want as guaranteed income.
If purchased with after-tax dollars (non-qualified), each payment is partially tax-free (return of premium) and partially taxable (interest). If purchased with pre-tax dollars (from a Traditional IRA/401k), the entire payment is taxable as ordinary income.
Higher interest rates produce higher payouts, so a rising-rate environment is favorable. Your age also matters: the older you are, the higher the payout rate. Many advisors suggest waiting until 70-75 when the payout rate is most favorable, unless you need income sooner.