How this calculator works
This calculator checks a quote you already have. It does not say whether to buy, and it names no insurer.
- Income now (an immediate annuity). You pay a lump sum and the insurer pays a fixed amount every month for life. You see the payout rate, the payback age, and the yearly return if you live to your life expectancy or to 85, 90 or 95. Life expectancy and the chance of reaching each age come from the Social Security Administration's 2023 period life table, as used in the 2026 Trustees Report.
- Fixed rate for a term (a multi-year guaranteed annuity, or MYGA). Your money earns a guaranteed rate for a set number of years. You see the value at the end, and what is left if you leave early.
How to read an annuity quote
An income quote shows the premium (what you pay in), the monthly income, the age and sex it was priced for, and the payout option. "Life only" means payments stop at death. A refund option pays your heirs any part of the premium not yet paid out, and a period-certain option keeps paying for a set number of years; both pay less each month than life only. Enter the life-only figure here: that is what the calculator models.
Is an annuity payout rate the same as a return?
No. A quote of $600 a month on $100,000 is a 7.2% payout rate, not 7.2% interest: each payment is partly your own money coming back, so the return depends on how many payments you live to collect. The calculator finds the yearly rate at which the monthly payments are worth exactly what you paid in: an internal rate of return, worked out like a bond yield.
A worked example
A woman of 70 has $100,000 and an example quote of $600 a month for life. The $600 is a made-up figure to show the method, not a real quote from any insurer.
- Payout rate: $7,200 a year, 7.2% of the premium.
- Payback: $100,000 divided by $600 is 166.7 months, so the 167th payment brings back what she put in, at about age 83.9. In the life table, 65% of women aged 70 reach that age.
- Life expectancy at 70 for women is 16.76 years, to about age 86.8. That is 201 payments, $120,600 in all, a return of 2.3% a year. About 52% of women aged 70 get that far.
| If she lives to | Total paid | Yearly return | Chance of getting there |
|---|---|---|---|
| 85 | $108,000 | 1.0% | 60% |
| 86.8 (life expectancy) | $120,600 | 2.3% | 52% |
| 90 | $144,000 | 4.0% | 37% |
| 95 | $180,000 | 5.4% | 15% |
Each chance is the table's survivors at that age divided by its survivors at 70: 49,469, 30,504 and 12,612 out of 82,374 for 85, 90 and 95. The same quote for a man of 70, with a life expectancy of 14.66 years, returns 0.7% a year if he lives exactly that long.
Surrender charges explained
A MYGA charges you for leaving before the term ends: a percent of the account value, usually falling each year, for example 7, 6, 5, 4 and 3% over five years. Say $100,000 earns a guaranteed 5% for five years with that schedule. Stay to the end and it grows to $127,628. Leave in year 3 and the account is worth $115,763, the 5% charge is $5,788, and you walk away with $109,974, which is $17,654 less than staying. Leave in year 1 and you get $97,650, less than you put in.
Some contracts also add a market value adjustment, which raises or lowers what you get on an early exit depending on how interest rates have moved since you bought. It is not modelled here, so check the contract.
What the calculator leaves out
- An income annuity is insurance against living a long time: buyers who die early pay for the income of those who live long, so a low return after an early death is the cost of that insurance.
- The life table is a population average. People who buy income annuities tend to live longer than average, and a period table applies 2023 death rates to every later year, so real lifetimes may run longer.
- Refund and period-certain options, joint lives, taxes, inflation and the insurer's ability to pay.
What does a $100,000 annuity pay per month?
It depends on the insurer's quote: your age and sex, interest rates on the day it is priced, and the payout option. There is no single figure, so get the quote and check it here. Small differences matter: for the woman of 70 above, $550 a month returns 1.2% a year at her life expectancy, $600 returns 2.3% and $650 returns 3.4%.
How long do you have to live for an annuity to pay off?
Just to get the premium back, until the payback age: the premium divided by the monthly income gives the months. After that the return turns positive and rises with every payment. The results table shows it for your own quote.
Can you take money out of a MYGA early without a charge?
Often some of it. Many contracts have a free withdrawal allowance, often 10% of the value a year. The calculator applies the charge to the whole account, so check the allowance in your contract. The schedule ends with the term; the contract says what happens after that.
