How much would a $500,000 annuity pay monthly if bought at age 65?
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms.
Putting $500,000 into an annuity could result in big payouts during retirement, but there are a few factors that may also play a role.
Getty Images
If you're nearing retirement right now, you're likely weighing options for turning your savings into reliable retirement income. The market has, after all, been anything but predictable recently, so your investment portfolio's value has been fluctuating. And, despite inflation cooling from recent highs, the higher cost of living we're facing today is still straining many retirees' budgets. When you add in concerns over Social Security's long-term solvency, it's no surprise that people are turning to products like annuities for peace of mind.
An annuity can be a smart tool to consider for retirement because it provides guaranteed income for life, which is a big reason why more people are now adding them to their retirement plans, especially retirees who want more stability amid market swings. But figuring out exactly how much income an annuity will generate isn't always a simple process. The answer depends on several factors, from your age and gender to the type of annuity you buy and what interest rates are at the time.
What is clear is that if you're planning to buy an annuity this year, you'll likely benefit from the current higher-rate environment. So, how much can you expect in monthly income from a $500,000 annuity if you buy it at age 65?
Learn how to add an annuity to your retirement plan now.
How much will a $500,000 annuity pay monthly if bought at age 65?
Let's start with the numbers. If you're 65 and buy a $500,000 immediate fixed annuity today, your monthly income will vary depending on your gender and whether the annuity covers one or two people. According to recent estimates from Cannex data analyzed by Annuity.org, here's what those monthly payments could look like:
Male, age 65 : Around $3,269 per month for life
: Around $3,269 per month for life Female, age 65 : Around $3,151 per month for life
: Around $3,151 per month for life Joint life, age 65: Around $2,863 per month (payments continue as long as either person is alive)
These numbers reflect a lifetime payout starting immediately. So, if you were to hand over $500,000 to an insurance company today to open an immediate fixed annuity, you would receive that monthly income for the rest of your life, no matter how long you live.
The reason payouts differ between men and women comes down to life expectancy. Women tend to live longer, which means insurance companies expect to make payments for more years. To account for that, the monthly annuity payouts for women tend to be slightly lower than for men. Meanwhile, joint life annuities, which cover two people, typically a married couple, offer even smaller payouts, since payments are expected to last even longer.
But gender and payout structure aren't the only factors at play. Here are a few others that influence your monthly annuity income:
The interest rate environment
One of the biggest drivers of annuity payouts is interest rates. That's because insurance companies invest your premium in fixed-income assets, and the yield they earn helps fund your future payments. When rates are higher, annuity payouts tend to be more generous. On the flip side, lower interest rates generally mean smaller monthly checks.
In today's rate climate, buyers are still seeing relatively strong payouts compared to what they would've locked in just a few years ago. But as the Federal Reserve looks toward possible rate cuts later this year, the window to lock in higher monthly annuity income may begin to shrink.
Find out how an annuity could help you prepare for retirement today.
The type of annuity
Not all annuities are created equal. The numbers above reflect a single premium immediate annuity (SPIA), which begins paying out right after purchase and offers a simple structure: You pay once and the insurer sends you monthly checks for life.
But there are other options. For example, deferred annuities start payments at a later date, which can result in higher income since your money has more time to grow. Variable and indexed annuities are tied to market performance, offering growth potential but less predictability. Lifetime annuities with a period certain (which provide guaranteed payments for a minimum number of years even if you die early) also come with tradeoffs, usually in the form of lower monthly payments in exchange for that added guarantee.
Payout features and inflation protection
Many retirees opt for added features like cost-of-living adjustments (COLAs) or refund guarantees, which help protect against inflation or ensure that your beneficiaries receive remaining funds. However, these features typically reduce your starting monthly payment. So while you might receive less per month initially, the long-term benefit could outweigh the upfront reduction, especially if you live a long life or want to leave something for beneficiaries.
Should you buy an annuity now or wait?
If you're eyeing an annuity but aren't quite ready to act, timing could be a big consideration. While rates are still relatively high, any forthcoming Federal Reserve rate cuts could reduce future annuity payouts. So, it could make sense to make your move now and lock in a good rate. On the other hand, if you're still a few years from retirement and can wait, a deferred annuity could boost your income later, though that comes with the risk of shifting market conditions.
One option that's nearly always worth exploring, though, is shopping around for quotes. Annuity pricing can vary widely between insurance companies, and working with a broker or using online marketplaces can help you compare your options side-by-side. You might also consider splitting your savings into multiple annuities or combining an annuity with other retirement income sources, like Social Security or a 401(k), to build a more flexible income plan.
The bottom line
A $500,000 annuity purchased at age 65 could generate between about $2,900 to $3,300 per month for life, depending on your gender and the payout structure. That kind of consistent income can offer peace of mind, especially in uncertain economic times.
Still, annuities aren't for everyone. Whether a $500,000 annuity makes sense for you depends on factors like your retirement goals, health, risk tolerance and income needs. Before buying, though, it's a good idea to compare multiple quotes. And if you're planning to buy soon, don't wait too long, as the current rate environment may not last much longer.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
23 minutes ago
- Yahoo
Best money market account rates today, June 20, 2025 (up to 4.41% APY return)
Find out which banks are offering the best MMA rates right now. The Federal Reserve cut the federal funds rate three times in 2024 for a total reduction of one percentage point. As a result, deposit interest rates — including money market account rates — have been falling. It's more important than ever to compare MMA rates and ensure you earn as much as possible on your balance. Although money market account rates are elevated by historical standards, the national average rate for MMAs is just 0.62%, according to the FDIC. The good news: Top high-yield money market accounts offer well over 4% APY — more than six times the national average. That's why it's important to shop around before opening a money market account. Interest rates vary widely, but there are several banks (in particular, online banks) and credit unions with highly competitive offers. Here's a look at some of the top MMA rates available today:Additionally, the table below features some of the best savings and money market account rates available today from our verified partners. Online banks operate exclusively via the web. This significantly reduces their overhead costs, so they're able to pass those savings onto customers in the form of high deposit rates and low fees. If you're searching for the best money market account rates, online banks are a great place to start. That said, online banks aren't the only place you can find savings accounts with rates of 4% to 5% APY. Credit unions are not-for-profit financial cooperatives, and are also know for providing competitive rates and fewer fees. Many credit unions have certain requirements that must be met in order to become a member, though there are some that allow just about anyone to join. Read more: Are online banks really safe? Money market accounts can be a great option for short-term savings goals, like building an emergency fund or setting aside money for an upcoming expense. They generally offer higher interest rates than regular savings accounts, and they provide easier access to your money compared to some other options like certificates of deposit (CDs). Money market accounts are also considered low-risk, and they are FDIC-insured up to the standard $250,000 per depositor, per institution. This makes them safer than money market funds, which can be subject to market risk. However, keep in mind that many money market accounts require a minimum balance to open the account and earn the highest advertised rate. If you can't maintain this balance, you might incur fees or miss out on the best rates. And although you can generally access your funds as needed, MMAs may limit the number of transactions you can make each month. If you need frequent access to your money, this might be a consideration. Read more: Is there a penalty for withdrawing from your money market account? When a money market account makes sense: You want to earn more interest than a regular savings account without locking up your money in a CD. You can maintain the minimum balance to avoid fees. You want to keep funds easily accessible for emergencies or near-term expenses. Currently, the average money market account rate is 0.63%. However, several high-yield accounts pay upwards of 4% or more. If you're considering opening a money market account, be sure to shop around and compare rates. There is no one account or investment that guarantees a 12% return. However, if your goal is to earn a strong return on your money and grow your wealth significantly, investing in market securities such as stocks, mutual funds, exchange-traded funds is the best strategy for doing so. The stock market returns about 10% per year, on average. If you aren't sure where to start, it can be helpful to speak with a financial advisor about your financial goals and priorities. Alternatively, you can sign up with a robo-advisor, which is an automated, cost-effective option for managing your portfolio. Read more: Robo-advisor: How to start investing right away
Yahoo
24 minutes ago
- Yahoo
Accenture is giving consulting a new name as it doubles down on AI: 'reinvention services'
CEO Julie Sweet said Accenture is doubling down on AI in an earnings call on Friday. She said the firm is creating a new business division focused on AI called "reinvention services." Sweet said that while bookings were down, revenue was up, and Accenture sees future potential in AI. After more than 35 years in the business, Accenture is giving consulting a new name: "reinvention services." The global consulting firm reported its earnings on Friday, highlighting a generally positive performance for the third fiscal quarter of 2025. The firm reported revenue of $17.7 billion, an 8% increase from this time last year. While new bookings were down 6% compared to the third quarter in 2024, Accenture CEO Julie Sweet told CNBC on Friday that the firm was "really pleased" with its bookings and that demand for its services could be seen in its revenue. Sweet said on the earnings call that AI is the firm's strongest bet for creating new demand and that to maximize AI's potential, the firm is consolidating its strategy, consulting, song, technology, and operations services into a single unit known as "reinvention services," starting September 1. "What we're going to do now is make it even easier to bring those solutions, embed data and AI, so we can really scale across our client base and into new markets using our reinvention services," Sweet told CNBC. What consultants do sometimes needs to be explained, and "reinvention services" is no exception. In both her CNBC interview and the earnings call on Friday, Sweet shared several examples of the company's AI-powered reinvention work, which — following its reorganization — the firm will be able to execute more efficiently, she said. In one example, she said Accenture is working with Italian shipbuilding company Fincantieri to launch the first AI-powered ship in 2025. Sweet told CNBC that the ship will be able to "predict its maintenance, manage its energy use on its own, and talk to the dock" before it arrives at its destination. She said Accenture's work to modernize the manufacturing process for Bel, maker of Laughing Cow cheese, would also fall under this new department, as would its collaboration with Brazilian mining company Vale to expedite environmental licensing and permits. She also said the firm is creating AI-generated 3D avatars of physical products for coffee brands like Nescafé, Dolce Gusto, and Nespresso to reduce the time and cost of developing marketing campaigns, which would also fall under the new reinvention services department. Sweet told CNBC that AI can be a "tool" to help companies navigate the future, but to reap the benefits, it will also need to be "disruptive." Read the original article on Business Insider Sign in to access your portfolio
Yahoo
29 minutes ago
- Yahoo
Best CD rates today, June 20, 2025 (up to 4.4% APY return)
See which banks are currently paying the highest CD rates. If you're looking for a secure place to store your savings, a certificate of deposit (CD) may be a great choice. These accounts often provide higher interest rates than traditional checking and savings accounts. However, CD rates can vary widely. Learn more about CD rates today and where to find high-yield CDs with the best rates available. Today's CD rates vary quite a bit. In general, however, CD rates are beginning to decline due to the Fed's decision to cut its benchmark rate three times in the later part of 2024. Even so, some banks are still offering competitive CD rates. For those that are, top rates reach about 4% APY. This is especially true for shorter terms of one year or less. Today, the highest CD rate 4.4% APY, offered by Western Alliance Bank on its 3-month CD. There is a $1 minimum opening deposit required. Here is a look at some of the best CD rates available today from our verified partners: Compare these rates to the national average as of June 2025 (the most recent data available from the FDIC): Compared with today's top CD rates, national averages are much lower. This highlights the importance of shopping around for the best CD rates before opening an account. Online banks and neobanks are financial institutions that operate solely via the web. That means they have lower overhead costs than traditional brick and mortar banks. As a result, they're able to pass those savings on to their customers in the form of higher interest rates on deposit accounts (including CDs) and lower fees. If you're looking for the best CD rates available today, an online bank is a great place to start. However, online banks aren't the only financial institutions offering competitive CD rates. It's also worth checking with credit unions. As not-for-profit financial cooperatives, credit unions return their profits to customers, who are also member-owners. Although many credit unions have strict membership requirements that are limited to those who belong to certain associations or work or live in certain areas, there are also several credit unions that just about anyone can join. Whether or not you should put your money in a CD depends on your savings goals. CDs are considered a safe and stable savings vehicle — they don't lose money (in most cases), are backed by federal insurance, and allow you to lock in today's best rates. However, there are some drawbacks to consider. First, you must keep your money on deposit for the full term, otherwise you'll be subject to an early withdrawal penalty. If you want flexible access to your funds, a high-yield savings account or money market account might be a better choice. Additionally, although today's CD rates are high by historical standards, they don't match the returns you could achieve by investing your money in the market. If you're saving for a long-term goal such as retirement, a CD won't provide the growth you need to reach your savings goal within a reasonable time frame. Read more: Short- or long-term CD: Which is best for you?
