Immediate Annuity Payout Calculator

What an immediate annuity is

A Single Premium Immediate Annuity, or SPIA, is one of the oldest and simplest products in finance. You hand an insurance company a lump sum. In return, they promise to send you a check every month for the rest of your life (or for a set number of years). Payments usually begin within a month of purchase, which is where the "immediate" comes from.

Why people buy them

A SPIA solves one specific worry: outliving your money. Social Security and a pension (if you have one) already provide lifetime income. A SPIA lets you convert some of your savings into a third layer of guaranteed income to cover the rest of your essential monthly expenses. Once housing, food, healthcare, and utilities are locked in, the remainder of your portfolio can be invested for growth or spent on wants without stressing about running out.

Payout options in plain English

Life only pays until you die. It gives the highest monthly check because there is no guarantee. If you die a year in, the payments stop and nothing goes to heirs. Life with period certain pays for your life, but guarantees a minimum number of payments (often 10 years). If you die during that period, your beneficiary receives the remaining payments. This lowers the monthly amount modestly. Joint and survivor continues payments as long as either you or your spouse is alive. It provides the lowest starting check but the longest expected total payout.

Why your age matters so much

Insurers price a SPIA based on how long they expect to pay you. A 65-year-old might get a payout rate around 6.5 percent of the premium, meaning $65,000 a year on $1 million. A 75-year-old might get closer to 9 percent, or $90,000. Waiting a few years to buy noticeably increases your monthly income because both your remaining life expectancy shortens and prevailing interest rates factor in.

The tradeoffs to think about

Once you buy a SPIA, the lump sum is gone. That money will not be there for emergencies, home repairs, a car, or a bequest to your kids. Inflation is another consideration: standard SPIAs pay a flat dollar amount forever, so purchasing power erodes over time. Some contracts offer inflation adjustments, but they lower your starting payment. Insurer strength matters, since the guarantee is only as good as the company backing it.

Get real quotes before you decide

Payout rates change with interest rates and vary meaningfully across insurers. The numbers here are illustrative averages to help you think about the tradeoffs. Before committing, request live quotes from at least three highly rated carriers and compare guarantees carefully.