How Much Does a $500,000 Annuity Pay Per Month?
A $500,000 annuity would pay you $2,396 per month if you buy it at 65 and begin payments immediately.
The same $500,000 annuity would pay $2,269 per month for a 65-year-old couple that begins joint lifetime income payments immediately.
What are the Monthly Payments for a $500,000 Annuity?
Using an annuity calculator I ran annuity quotes to determine what a $500,000 annuity would pay you per month with payments beginning immediately for ages 55-70.
So for instance, at age 55 a $500,000 annuity would pay $1,825 per month or $21,900 annually with payments beginning immediately. If you are 70 a $500,000 annuity would pay you $2,605 per month beginning immediately.
$500,000 Annuity Payout Table
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How Much Interest Does a $500K Annuity Pay?
A $500,000 annuity would pay you $1312.50 interest per month. If you allow your annuity interest to accumulate and make a withdrawal annually a $500,000 annuity would pay $15,979 per year.
You can compare today’s highest fixed annuity rates here.
Are Annuities a Good Investment?
Annuities are a good investment for retirement in today’s low-interest-rate environment, but an annuity is not right for everyone. As a general practice at My Annuity Store, our first step in retirement income planning is to complete a basic retirement income planning worksheet with our clients.
If we determine there is an income gap between guaranteed income from other sources (Social Security/ Pension) and necessary retirement expenses we often purchase an income annuity with monthly payments sufficient to fill the cap.
We very rarely recommend allocating more than 50% of your liquid net worth to an annuity as annuities come with a surrender charge for excess withdrawals during the surrender charge period.
Income Riders vs Immediate Annuities
Annuities are the only financial vehicle that can guarantee an income stream you can not outlive. However, we’ve found that most of our clients think of annuitization when they think of lifetime income payments.
All of the income payments referenced in this guide are generated using a fixed index annuity with an income rider. Indexed annuities provide more flexibility than annuitization because you don’t give up control of your asset.
You have access to your account value even while you are taking lifetime income payments. Excess withdrawals above your lifetime income amount will reduce your income payments moving forward.
If there are still funds in your account at your death they are paid directly to your beneficiary as a lump sum death benefit.
What is the Best Age to Buy an Annuity?
Generally speaking, the best time to purchase an income annuity is 10 years prior to beginning your annuity payments. This is because most annuity income riders have a guaranteed “roll-up” rate that is applied to your income base each year for 10 years guaranteed for 10 years.
Your lifetime annuity payments are calculated by multiplying your income base by a payout percentage that is determined by your age. If you purchase the annuity 10 years before you begin taking your income payments you receive the full benefit of the income rider.
If you reference the table above you will notice that a monthly income paid by $500,000 is the same if purchased at age 60, 61, or 62.
So if you were considering purchasing an annuity at 62; in this scenario, the best time would be to purchase at age 60 because you would receive 2 years of additional guaranteed income.