Annuity Payout Calculator

An annuity payout calculator is a financial tool that helps you compare different annuity payment options and calculate monthly income, lifetime payouts, tax implications, and break-even ages. It allows you to evaluate life only, period certain, joint life, fixed period, and systematic withdrawal options to determine the best strategy for your retirement income needs.

Life Only (Single Life Annuity) provides the highest monthly payment because it offers no beneficiary protection and payments stop at death. However, this option carries the highest risk. If you die early, your beneficiaries receive no remaining payments, and the total amount received may be less than your initial investment. It's best suited for single individuals in excellent health with other assets for beneficiaries.

A joint life annuity provides payments as long as either you or your spouse is alive. You can choose survivor benefit percentages of 50%, 75%, or 100%. While the initial payment is lower than life only options, it ensures your spouse continues receiving income after your death, making it ideal for married couples.

Adding a Cost of Living Adjustment (COLA) reduces your initial payment by about 15% but increases payments annually (typically 2-3%) to maintain purchasing power. It's recommended if you're concerned about inflation, have a long life expectancy, or expect to live 20+ years in retirement. The break-even point is usually 10-15 years.

A period certain annuity (also called life with period certain) guarantees payments for a specific period (typically 10-20 years) even if you die early. If you pass away before the period ends, your beneficiaries receive the remaining payments. This option balances higher income with beneficiary protection and is ideal for most retirees.

Annuity payments are partially taxable based on the exclusion ratio. The portion representing your principal (return of investment) is tax-free, while the earnings portion is taxed as ordinary income. For example, if your exclusion ratio is 40%, then 40% of each payment is tax-free and 60% is taxable at your federal and state income tax rates.

The break-even age is when your total annuity payments equal your initial investment. For example, if you invest $500,000 at age 65 and receive $2,500/month, your break-even age is approximately 81.7 years. Living beyond this age means you've recovered your investment and are receiving 'profit' from the annuity.

No, annuity payout elections are typically irrevocable once payments begin. This is why it's crucial to carefully compare all options using a calculator before making your decision. Consider your health, marital status, beneficiary needs, and income requirements before selecting a payout option.

Systematic withdrawal allows you to take regular distributions (typically 4% annually) while maintaining control of your annuity balance. This provides flexibility to adjust withdrawals, access to remaining principal, and legacy potential for beneficiaries. However, it requires investment management and carries market risk unlike guaranteed annuity payments.

Health status significantly impacts life expectancy calculations and payout amounts. Poor health may qualify you for higher payments through medically underwritten annuities. Our calculator adjusts life expectancy: Excellent health adds 5 years, Good adds 2 years, Average is baseline, Poor subtracts 5 years, and Critical subtracts 10 years from standard life expectancy tables.

Immediate annuities begin payments within one year of purchase, ideal for retirees needing income now. Deferred annuities delay payments to a future date, allowing the principal to grow tax-deferred. Deferred annuities typically offer higher eventual payouts due to accumulation period growth. This calculator works for both types once you're ready to start receiving payments.

It depends on your situation. Annuity payouts provide guaranteed lifetime income, protection against outliving savings, and simplified management. Lump sums offer flexibility, investment control, and full legacy potential but require discipline and investment expertise. Consider your age, health, other income sources, investment knowledge, and need for guaranteed income when deciding.