How Much Does a $100,000 Annuity Pay Per Month?
For a 65 year-old man a $100,000 Immediate Annuity would pay a guaranteed lifetime income of $449 per month. The same income annuity would pay a 65 year old woman a slightly lower $421.00 monthly payment for life.
The above numbers are based on the highest immediate annuity income factor offered from an A+ rated Insurance Company on March 3, 2021.
These initial monthly annuity payments are calculated using the sinlge lifetime only income payout option which is something we very rarely would recommend. As we will be covering momentarily; you can often guarantee an income payment will last as long as either you or your spouse are alive for little reduction vs the single life only option.
How are Annuity Payments Calculated?
The monthly income you will receive from a $100,000 is determined by many different factors including:
- Your age
- Gender
- The income payout option you select
- How long you own the annuity before beginning your monthly payments
- If you select a single or joint lifetime income option
- The Financial Rating of the Insurance Company You Select
Three Types of Annuity Payout Options
The below table lists how much a $100,000 immediate annuity pays per month beginning right away. This is because women have a longer life expectancy so the insurance company assumes they will have to make income payments longer for women than men.
This table shows the monthly payments beginning immediately for a 65 year old husband and wife based on single life payout as well as joint life payouts. and a joint-life option that will continue to pay as long as either is alive.
Also included is a life with a cash refund option. Earlier I mentioned I never recommend a life-only payment option and here is why.
$100K Monthly Annuity Payments for 65 Year Old Male and Female
| Age 65 | Male | Female | Joint |
|---|---|---|---|
| Life Only | $449 | $421 | $389 |
| Life with Cash Refund | $401 | $382 | $368 |
This next table lists the same payout options but for a 60-year-old male and female with payments beginning 5 years sooner. As you’d expect the younger you are when you begin receiving annuity payments the lower your monthly income will be.
$100K Monthly Annuity Payments for 6o Year Old Male and Female
| Age 60 | Male | Female | Joint |
|---|---|---|---|
| Life Only | $395 | $375 | $357 |
| Life with Cash Refund | $367 | $351 | $338 |
Income Annuity Payout Options Explained
There are different income annuity payout options available as you saw in the table above. You may have been wondering what a lifetime with installment refund and lifetime with cash refund were.
Lifetime with Installment Refund: If the contract owner deceases prior to receiving all of their initial purchase premium back the payments will continue to be made to elected beneficiary until the full $100,000 has been paid back.
Lifetime with Cash Refund: If the owner deceases prior to receiving all of their initial premium back the difference between payments received and $100,000 purchase premium is paid to the beneficiary in a single lump sum payment.
Index Annuity With Income Rider Monthly Income Payment
Optional income riders can be attached to index annuities for a fee. The below table lists the deferred annuity and rider with that pay the most monthly income for a 65-year-old who wishes to begin income right away.
As you can see an index annuity with an income rider actually generates more monthly income than an immediate annuity does. Up until very recently, that was never the case.
When you purchase an index annuity with an income rider you are not annuitizing like an immediate annuity. This means you are not giving up control of your asset and have more flexibility should your needs or plans change.
| GUARANTEED INCOME RIDER FEE INCOME | ||||||||||||
| A+ Nationwide (Founded in 1929) Bonus Income+ Rider_single Annuity: Nationwide Peak 10 (Most States) | 1% annually | $472 | ||||||||||
| A Symetra Life Insurance Company (Founded in 1957) Symetra Income Edge with GLWB Rider Annuity: Symetra Income Edge | 1.2% annually | $458 | ||||||||||
| A+ Protective (Founded in 1907) Protective Level Income 15 (Defer bonus) Annuity: Protective Guaranteed Income Indexed Annuity | 1.2% annually (2% max) | $442 | ||||||||||
| A+ Great American (Founded in 1872) Premier Income Bonus GLWB Annuity: Premier Income Bonus | 1.15% annually | $442 | ||||||||||
| A AIG (Founded in 1960) Lifetime Income Max Annuity: Power Index Preferred Plus Income with Lifetime Income Max | 1% annually | $429 | ||||||||||
| A AIG (Founded in 1960) Lifetime Income Plus Multiplier Flex Annuity: Power Index Preferred Plus Income with Lifetime Income Plus Multiplier Flex | 1% annually | $429 | ||||||||||
| A+ Protective (Founded in 1907) Protective Level Income Rider Annuity: Protective Income Builder | 1% annually (2% max) | $425 | ||||||||||
How Are Annuity Payments Taxed?
In general, annuities are taxed using the LIFO (last in first out) method. This means the withdrawals you take from an annuity the last money put into the contract is what the IRS uses for tax purposes. What that means to you is any interest or gain you have inside of your annuity will come out prior to your principal so you will be taxed on 100% of all withdrawals until you’ve taken out all of your interest.
One advantage to using an immediate annuity is a large portion of each monthly payment is considered to be your principal that you purchased the annuity with. The amount not taxed is called the exclusion ratio; you can see in the example below that the exclusion ratio is 88.8%. That means only 11.20% of each annuity payment is treated as income and taxed.
Tax Favorable Income Annuity Strategies
If you have an annuity you’ve owned for quite some time you may be reluctant to withdraw your funds because you’ve got a lot of gains built up which will be fully taxable. A commonly used tax planning strategy is to 1035 Exchange your annuity to an income annuity that will pay you a monthly income for life.
Using this method will again consider a portion of each payment to be your initial deposit and a portion to be the gain you’ve accumulated. This can be favorable as it will spread your taxes out into smaller chunks over the course of your lifetime.
Frequently Asked Questions
All annuities have the ability to be turned into a guaranteed lifetime income; however, many types of annuities are purchased only for accumulation. Income Annuities are those that are designed specifically to generate a lifetime income stream. The 3 types are:
- Immediate annuity (provides guaranteed, lifelong income starting 1-12 months after purchase)
- Deferred Immediate Annuity (DIA), or Longevity, annuity (provides guaranteed, lifelong income starting 2-40 years after purchase)
- Qualified Longevity Annuity Contract or QLAC (a longevity annuity purchased with IRA funds starting after age 72)
Income annuities do not charge a fee.
Income Annuity Quote
Fill out the form below to receive an immediate annuity quote report listing the monthly income amounts for the top 10 annuity companies. You are also welcome to use some of these income annuity calculators if you would like to run some quotes and play with the numbers.
