How Much Does a $300,000 Annuity Pay Per Month?

Annuity payments depend on several factors, including your age, gender, life expectancy, interest rates, annuity type, lump-sum investment, single or joint policies, immediate or deferred payouts and term limits.

Any guarantees within your annuity can also affect monthly payouts. For instance, if you have a cost-of-living adjustment rider, your payments could increase over time to keep up with inflation and rising living costs.

Annuities offer a variety of payout options tailored to your financial goals and needs. Whether you prefer fixed, variable, index, immediate or deferred payments, understanding each type helps you plan for consistent income during retirement.

A fixed annuity has a fixed interest rate and fixed payout terms. This means you’ll get the same monthly payment for your payout period, whether for a few years or the rest of your life.

Some folks prefer fixed annuities because they know exactly how much they’ll get every month, which can help them set a budget based on what they’re getting from their payout. If you’re short from your annuity, you may need to look into other income opportunities, like Social Security, an IRA, your 401(k) or something else.

A $300,000 immediate lifetime annuity for a relatively healthy, 65-year-old male will pay between $1,800 and $2,000 monthly. For women of the same age, payments are between $1,700 and $1,900 monthly.

While a fixed annuity has a fixed interest rate, a variable annuity has a variable interest rate. That means payments can change from month to month. There’s a chance you could earn more on any given month with a variable interest rate, but you could also stand to earn less since it fluctuates.

Your funds can be placed in a premium account, where they are invested in stocks, bonds and other assets, or in a fixed account that offers a guaranteed minimum interest rate when payouts start.

Because of fluctuation, predicting your return for variable annuities is not as easy for fixed annuities. In the last 30 years, stock market returns have averaged anywhere between 7% and 10%, depending on the type of investments you have. With a $300,000 variable annuity, you can expect similar returns based on market performance.

If you have an index annuity, it’s invested in an index, like the S&P 500 or NASDAQ. Your insurance company invests your funds in stocks, bonds, mutual funds or other securities. While your funds could earn money and generate a higher monthly payout, they could also lose money and mean a lower monthly payout.

In the last 50 years, the S&P 500 averaged about 10% to 12% returns, depending on what you invest in. You can expect similar returns if you have a $300,000 index annuity.

An immediate annuity is when you get annuity payments right away. Once you make your lump-sum annuity payment, you’ll start receiving annuity payouts about a month after you’ve purchased your annuity.

Immediate annuities might be an option if you want an instant source of income during retirement. However, payments start right away, so there isn’t much time for interest to build up.

For a 65-year-old retired male, a $300,000 immediate lifetime annuity would pay between $1,800 and $2,000 monthly. For women of the same age, you can expect around $1,700 and $1,900 monthly, depending on your annuity factors.

Rather than take payments immediately, deferred annuities let you put off payments for months or years. You can have a fixed, variable, or index deferred annuity. The longer your money accumulates, the larger your monthly payments will be.

For a 45-year-old male with a $300,000 deferred lifetime annuity with income set to start in 20 years — or at 65 — that’s about $5,182 monthly. For a 55-year-old male beginning in 10 years, those payments would be $3,073.

Annuities are easy to customize to your needs and specifications. Here are a few ways to set them up to see how payments could work for you.

Mary is a 65-year-old retiree who buys a $300,000 immediate, fixed annuity with a 20-year payout period. Payments stop once Mary reaches 85.

For her $300,000 annuity, Mary gets $1,672 every month for 20 years.

Mark is 55 years old and buys a $300,000 deferred lifetime annuity. Payments are set to start 10 years after the initial investment, which means Mark won’t get his first payout until he’s 65.

For Mark, a $300,000 annuity pays out $3,073 per month when he starts to receive payments. His payout is much larger than Mary’s, thanks to the accrued interest built up over 10 years from deferring payments.

Mack and Martha are both 50 years old. They are buying a $300,000 joint lifetime annuity and deferring payments for 10 years. At 60, they will get $2,376 per month from their annuity.

Deferring their annuity sets them up for larger payments down the road. If Mack and Martha opted for immediate payouts, they would get $1,378 per month — about $1,000 less than they would get a decade later.

The payouts from a $300,000 annuity depend on when you start receiving payments, making each plan unique. Avoid comparing your payouts to others, as they vary based on individual factors.

Given the complexity of annuities, consulting a financial advisor is wise. A fiduciary advisor who prioritizes your best interests can guide you toward the most suitable plan. Remember, everyone’s financial goals are different, and seeking expert advice can help you make the best choice for your future.

Editor Norah Layne contributed to this article.