How Much Does a $250,000 Annuity Pay Per Month?

Annuities are calculated based on a variety of factors, including interest rates and the type of interest rate selected. Other considerations include whether payments are immediate or deferred, the individual’s health and life expectancy, the amount of money invested and the choice between fixed or lifetime terms. Additionally, the policy can be structured for a single individual or jointly with another person.

Payments can also incorporate features such as riders or additions. For example, a cost-of-living adjustment rider can increase payments annually to account for inflation. While it is possible to estimate your annuity to understand potential payouts, these figures are approximate. The exact amounts are determined only after completing the application process.

Annuities provide a range of payout options designed to align with your financial goals and needs. From fixed, variable and index payments to immediate or deferred options, understanding these choices can help you plan for a steady income in retirement.

A fixed annuity pays you the same amount every month for a set amount of time, whether you have a set end term or a lifetime payout. With a fixed interest rate, you’ll know exactly how much you’ll receive monthly through predictable payments. It’s good for those on a set monthly budget, whether that’s Social Security or a mix of other retirement accounts.

With a $250,000 annuity, monthly payments for a 65-year-old is about $1,300 to $1,600, depending on interest rates when you make your initial investment.

With a variable annuity, you’ll have a variable interest rate rather than a fixed one. You could earn more with a variable interest rate, but payouts may not be consistent. Variable interest rates are based on market conditions, so what you’ll earn comes from how the stock market is doing.

Based on historical returns, a single 65-year-old can expect to earn between $1,000 and $1,300 a month on a $250,000 annuity.

Index annuities are based on an index like the S&P 500. If your insurance company uses your annuity and invests it in a set of solid securities, you could earn more than the minimum amount agreed upon by you and your insurance company. But if those investments lose money, your monthly annuity payout may be lower.

For a $250,000 index annuity, you could expect between $1,100 and $1,400 a month, depending on how your investments perform and other factors in your annuity.

To get payments right away, opt for an immediate annuity. After you make your full annuity payment, you’ll receive monthly payments immediately. You may not earn as much as you would if you defer your payments until down the road, but this might be the best option for those who want to start getting predictable monthly income immediately.

If you put off payments for 10 years on a $250,000 annuity, monthly payments for a single-life plan would be between $1,500 and $1,800.

Putting off payments for one, five or 10 years later can boost payments thanks to all the interest that’s built up over that deferred time. Your deferred timeframe will give you a better idea of how much you can expect each month. The longer you wait, the more you can get each month.

If you put off payments for 10 years on a $250,000 annuity, monthly payments for a single life plan would be around $1,500 and $1,800 a month.

Monthly payments can vary widely depending on individual circumstances. Here are a few common scenarios to help you envision what your future payments might look like.

Barb is a 65-year-old retiree who receives a single, fixed annuity with a 20-year term. The payments will stop when she reaches 85.

A $250,000 annuity for Barb will get $1,385 monthly for 20 years.

Bill is 65 years old and receives a deferred annuity, with payments starting 10 years after the initial investment.

With a $250,000 lifetime annuity, Bill will get $3,509 monthly, thanks to the accumulated interest.

Bob and Bonnie are both 60 years old, and they get a joint lifetime annuity plan to cover them both. They decide to defer payments for five years, so they’ll get $1,666 per month when they do.

Waiting to receive payments puts them in a better financial position than taking immediate payments now. If they opted for an immediate payout, they’d get about $1,246 monthly instead.

Getting a $250,000 annuity means monthly payouts will be different for everyone. Since everyone has different needs, goals and factors, your payout may not be the same as someone else’s. Your payout might be enough to cover all your monthly needs, but others may need additional help through Social Security, retirement plans or something else.

It can get confusing, so you should talk to an expert about structuring your short- and long-term plans. A financial planner or advisor can help ensure you’ve got everything you need right now and in the future. Try to find someone who has experience with annuities and is a fiduciary so you can assure that you’re getting someone who puts your best interest first.

Editor Norah Layne contributed to this article.