Turning savings into lifetime income

Retirees must convert decades of savings into reliable monthly income that lasts their entire lives. Inflation and changing interest rates make this task harder in today's economic environment.

Annuities provide predictable payments

An annuity converts a portion of retirement savings into regular payments. A seven hundred fifty thousand dollar annuity can provide substantial monthly income, but the exact amount depends on multiple factors.

Age sixty: three thousand nine hundred seventy-five dollars for men

According to Annuity.org analysis, a sixty-year-old man could receive about three thousand nine hundred seventy-five dollars per month from a single-life immediate annuity. A woman the same age could receive about three thousand seven hundred seventy-three dollars.

Age sixty-five: four thousand six hundred eighty-eight dollars for men

At age sixty-five, estimated payments increase to about four thousand six hundred eighty-eight dollars per month for a man and four thousand four hundred twenty-five dollars for a woman from the same seven hundred fifty thousand dollar investment.

Age eighty: eight thousand six hundred twenty-five dollars for men

An eighty-year-old man could receive about eight thousand six hundred twenty-five dollars per month, while a woman could receive approximately eight thousand one hundred dollars. This is more than twice what a sixty-year-old man receives.

Why age matters: shorter payment periods

With a single-life immediate annuity, payments continue for the annuitant's lifetime. Starting at eighty shortens the expected payment period, allowing for a substantially larger monthly check than starting at sixty.

“Starting at 60 could mean the insurer makes payments for several decades, and, in turn, the monthly benefit is lower.”

Gender affects payouts due to life expectancy

Women tend to have longer life expectancies, which can result in slightly lower monthly payments than men receive. These numbers are estimates rather than guaranteed offers and depend on the insurer, state, prevailing rates and contract options.

Payout options reduce monthly income

A sixty-five-year-old man receiving four thousand six hundred eighty-eight dollars monthly from a single-life annuity would get four thousand five hundred sixty dollars with a ten-year certain period. A joint-life annuity covering two people pays four thousand twenty dollars.

Balancing income against protection

A single-life contract maximizes immediate income but offers little to a spouse or heirs after death. Adding guarantees or covering two lives reduces monthly benefits but provides protections important to broader retirement planning.

“A single-life contract may maximize your immediate income, but it may offer little or nothing to a spouse or heirs after you die.”

Consider liquidity before committing funds

Once a large sum is committed to an immediate annuity, you generally cannot access that money the same way as funds in savings or investment accounts. Maintaining sufficient liquid savings outside the annuity is especially important for emergencies.