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Monthly payout from $500,000
| Rate | 10 years | 15 years | 20 years | 25 years | 30 years |
|---|---|---|---|---|---|
| 3% | $4,828 | $3,453 | $2,773 | $2,371 | $2,108 |
| 4% | $5,062 | $3,698 | $3,030 | $2,639 | $2,387 |
| 5% | $5,303 | $3,954 | $3,300 | $2,923 | $2,684 |
| 6% | $5,551 | $4,219 | $3,582 | $3,222 | $2,998 |
| 7% | $5,805 | $4,494 | $3,876 | $3,534 | $3,327 |
Worked example
r = 5% ÷ 12 = 0.004167, n = 240. Payout = $500,000 × 0.004167 ÷ (1 − 1.004167−240) = $3,299.78. Total received: $791,947.
Lifetime annuities are priced differently
A lifetime (single premium immediate) annuity pays until death, so the insurer prices it on your age, sex and life expectancy. Those quotes cannot be derived from a formula; ask several insurers. A period-certain payout, shown here, ends after the chosen years, with any remaining payments going to a beneficiary.
Sources and assumptions
- Ordinary annuity formula, monthly compounding.
Related
Frequently asked questions
How much does a $500,000 annuity pay per month?
About $3,299.78 for 20 years at 5%, as a fixed-period payout.
Does an annuity pay for life?
Only a lifetime annuity does. Period-certain payouts stop after the chosen number of years.