Annuities
How Much Does a $500,000 Annuity Pay Per Month?
Payout ranges by age and contract type, why joint-life costs roughly 10%-15% of income, and how to compare quotes on the only number that matters.
8 min read · Updated September 2026
Topic hub
Annuities Explained: Types, Fees, Payouts and Who They Fit
An annuity is a contract with an insurance company that converts a lump sum or a series of premiums into guaranteed income. The category covers very different products, and the differences decide whether a contract fits a retirement plan or quietly drags on it.
The four annuity families
| Type | How growth works | Principal risk | Typical use |
|---|---|---|---|
| Fixed (MYGA) | Stated rate for a set term | None from markets | CD alternative, 3-7 year money |
| Fixed indexed (FIA) | Index-linked, capped or participation-rated | None from markets | Growth with a floor, income riders |
| Variable (VA) | Subaccounts invested in markets | Yes | Tax-deferred investing, living benefits |
| Immediate / deferred income (SPIA, DIA, QLAC) | Pooled mortality credits | Principal exchanged for income | Pension-style lifetime paycheck |
What actually drives your payout
- Your age and gender at the time income starts — mortality credits do most of the heavy lifting.
- Interest rates on the day the contract is issued, which is why quotes expire.
- Whether the income is single life, joint life, or period certain.
- Rider charges, usually 0.85%-1.25% per year deducted from the contract value.
Where annuities go wrong
Most annuity regret traces back to three things: surrender periods longer than the buyer's real time horizon, income riders bought for money that will never be turned into income, and illustrations that project index credits at rates the caps cannot support. Read the guaranteed columns, not the hypothetical ones.
Guides in this section
Annuities
Fixed Indexed Annuity vs CD: Which Is Better for Retirement Money?
CDs win on simplicity and liquidity. Annuities win on tax deferral and lifetime income. Here is how to tell which your money actually needs.
7 min read · Updated August 2026
Annuities
Annuity Fees and Surrender Charges, Line by Line
Fixed and indexed annuities can have almost no explicit fee. Variable annuities can run past 3% a year. Know which one you are being shown.
6 min read · Updated July 2026
Annuities
QLACs: Using a Deferred Annuity to Cut RMDs and Delay Taxes
A QLAC lets you move a slice of IRA money out of required minimum distributions until as late as age 85 — useful for tax control, not for everyone.
6 min read · Updated June 2026
Annuities
Building a Guaranteed Income Floor for Retirement
Cover the bills you must pay with income that cannot stop. Invest the rest. This one structural decision removes most sequence-of-returns risk.
8 min read · Updated September 2026
Annuities
Annuity vs IUL for Retirement Income: Which Produces More?
One gives you a contractual paycheck that is partly taxable. The other gives you a flexible, tax-advantaged stream that depends on policy performance.
8 min read · Updated July 2026
Frequently asked questions
- Are annuities a good investment?
- An annuity is not an investment in the usual sense — it is insurance against outliving your money. Judge it by guaranteed income per dollar of premium and by liquidity, not by projected returns.
- How much of my savings should go into an annuity?
- A common planning range is enough premium to cover the gap between guaranteed income sources (Social Security, any pension) and essential monthly expenses. That is frequently 20%-40% of retirement assets, and many state suitability rules flag much more than that.
- Can I get my money back out of an annuity?
- Most deferred contracts allow 10% free withdrawals per year after the first year. Beyond that, surrender charges typically start between 7% and 10% and decline to zero over the surrender period, and withdrawals before 59½ can add a 10% IRS penalty.