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How Much Does a $500,000 Annuity Pay Per Month?

How Much Does a $500k Annuity Pay Per Month in 2024

A $500,000 annuity would pay you approximately $3,303 per month if you purchased the annuity at age 65 and began taking your annuity payments immediately.

How Much Does a $500,000 Annuity Pay Per Month?

Using advanced annuity payment software I gathered annuity quotes to see how much a $500,000 annuity would pay per month assuming payments began immediately (for ages 60 to 70).

I researched 80 annuity companies and listed the highest-yielding annuity payment in the table below. These annuity payouts indicate how much a $500,000 annuity would pay you depending on how old you are at the time of purchase.

$500,000 Annuity Payments Beginning Immediately

Annuity payments are based on an initial deposit of $500,000, life with installment refund payout option, and payments beginning 30 days after contract issue.

What Type of Annuity Pays the Most?

Play Video about Balancing annuity payouts

The table compares monthly payments of three types of annuities (assuming a $500,000 deposit and payments beginning immediately.

The fixed annuity payment is based on taking free withdrawals of interest from a fixed annuity with a 5.75% interest rate. The income generated is less than the other types but you retain your initial $500,000 investment.

SPIA (single premium immediate annuities) offers the least amount of flexibility; you give up control of your $500K investment. However, the guaranteed lifetime income payments are the best if you are aged 68 through age 72.

Index annuities with an income rider provide lifetime income guarantees and flexibility as you retain access to your account while receiving lifetime income. Income riders pay more than a SPIA for anyone 62 to 67 years old.

65$2,395$3,303 $3,304
66$2,395$3,367 $3,371
67$2,395$3,438 $3,442
68$2,395$3,520 $3,508
69$2,395$3,579 $3,529
70$2,395$3,652 $3,563
71$2,395$3,727 $3,596
72$2,395$3,811 $3,637

How Much Does a $500,000 Annuity Pay in the Future?

The longer you wait to begin taking your payments after purchasing your annuity the higher your payments will be. Deferring your annuity payments can increase the amount of lifetime income you receive significantly because you benefit from interest rate credits and mortality credits.

Lifetime annuity payments are based on life expectancy/mortality credits. Your annuity payments increase each year you defer your lifetime income payments because your life expectancy is decreasing.

The table below estimates how much a $500,000 annuity would pay if you deferred your payments for a number of years.

AgeIn 5 YearsIn 10 yearsIn 20 Years
50$53,110 $77,851
55$38,938 $58,680 $86,400
60$43,313 $63,213
65$47,688 $69,561
70$52,063 $72,563

How Much Interest Does a $500,000 Annuity Pay Per Year?

Not looking to buy a lifetime income annuity? You can also generate a monthly income using fixed annuities.

A $500,000 annuity would pay you $29,519.92 per year in interest, or $2,395.83 per month if you prefer to set up systematic withdrawals of interest. These payments assume a guaranteed interest rate of 5.75%. 

If you would like to see rates for deferred annuities you can find today’s annuity rates here.

Fixed annuities pay a specified interest rate for a set number of years, and most of them allow you to take the interest you earn as monthly payments. 

Taking monthly withdrawals of the interest your fixed annuity earns is a popular way to generate extra retirement income because your principal stays intact.

Your initial $500,000 annuity deposit will be returned to you at the end of your annuity contract. 

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Complete the form below and we’ll email you an annuity quote within four business hours. For more immediate assistance you can reach us at 855-583-1104, or use our annuity payment calculator.

Annuity Companies with the Highest Payouts

The below lists the annuity companies that offer the highest $500,000 annuity payments for a 65-year-old assuming life with an installment refund option (as of 05/28/2024).

$500k annuity payouts at 65 from top 10 insurance companies

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. 

Are Income 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 recommend utilizing an income annuity to fill in your income gap.

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.

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