Annuity Calculator
Calculate annuity payments, future value and present value for fixed annuities.
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Annuity payouts in 2026: the numbers that matter
Higher interest rates made annuities meaningfully better deals than in the 2010s. In early 2026, a 65-year-old putting $200,000 into a single premium immediate annuity (SPIA) gets roughly $1,150 to $1,280 per month for life, a payout rate near 7% of premium per year. At 70, the same premium pays about 8%. Multi-year guaranteed annuities (MYGAs), the CD-like deferred product, pay 4.5% to 5.5% guaranteed for 3 to 7 year terms.
Payout rate is not return. Part of every SPIA check is your own principal coming back. The implied return depends on how long you live: die at 75 and the 7% payout was a poor deal; live to 95 and it handily beat bonds. That is the point: an annuity is longevity insurance, not an investment, and it competes with the 4% withdrawal rule, not with the stock market.
The accumulation math this calculator runs
Future value of monthly contributions: FV = PMT x ((1 + r)^n - 1) / r r = annual rate / 12, n = months Present value of a payout stream: PV = PMT x (1 - (1 + r)^-n) / r
Worked example: deferred annuity, then income
Accumulate: $500/mo at 6% for 20 years FV = 500 x ((1.005)^240 - 1) / 0.005 = 500 x 462.04 = $231,020 Convert at 65 to SPIA at ~7% payout: $231,020 x 0.07 / 12 = ~$1,348/month guaranteed for life
Fees and the products to be careful with
SPIAs and MYGAs are simple and cheap. Variable annuities and many fixed indexed annuities are not: total annual costs of 2% to 3.5% (M&E charge, rider fees, fund expenses) are common, surrender penalties run 7 to 10 years, and indexed products cap your upside (a 10% cap with a 0% floor historically earns 4% to 6%, not the index). If an annuity is pitched with a steak dinner, ask for the payout rate, the all-in annual cost, and the surrender schedule in writing before anything else.
Also check the insurer: guarantees are only as good as the company. Stick to carriers rated A or better by AM Best, and stay within your state guaranty association limit (commonly $250,000 of annuity value per insurer).
Payout figures from immediateannuities.com quote surveys and carrier rate sheets, early 2026. Educational estimates, not insurance or investment advice.
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Frequently Asked Questions
What is an annuity?
An annuity is a financial product where you make a lump-sum payment (or series of payments) in exchange for regular disbursements beginning immediately or at some future date. They are commonly used for retirement income. Types: immediate annuity (payments start now), deferred annuity (grows first, pays later), fixed (guaranteed rate), variable (market-linked), and indexed (tied to a market index with downside protection).
Are annuities a good investment?
Annuities provide guaranteed income and longevity protection, but often come with high fees (1-3% annually), surrender charges (5-10 years), low returns vs market investments, and complexity. They make sense for retirees who: have maxed all tax-advantaged accounts, want guaranteed lifetime income beyond Social Security, or are extremely risk-averse. For most investors under 60, low-cost index funds outperform annuities.
How are annuity payments taxed?
For non-qualified annuities (funded with after-tax money), each payment is split between a taxable earnings portion and a tax-free return of principal using the exclusion ratio. For qualified annuities (funded with pre-tax money like in an IRA), the entire payment is taxable as ordinary income. Withdrawals before age 59.5 trigger a 10% early withdrawal penalty on the earnings portion.