A $50,000 annuity could help boost your income during retirement, but before you invest in one, it's important to know what your monthly payments could be.
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In today's uncertain economic landscape, many Americans are feeling the financial squeeze — and that's especially true for seniors and soon-to-be retirees. While there has been some improvement in the inflation rate over the last few months, the persistently higher costs of everyday essentials are having a big impact on people's budgets and creating significant challenges for those who are no longer working. And, when you combine those pressures with the recent stock market volatility that's occurred, it makes sense for seniors and retirees to search for predictable income streams that they can rely on.
That's where annuities can play a big role in the right retirement plan. These insurance products offer guaranteed monthly payouts in exchange for a lump-sum investment, making them an appealing option for those worried about outliving their savings or riding out the next market downturn. Unlike stocks or mutual funds, annuities can provide monthly income for life. And, some even offer inflation protection or spousal benefits that can further boost the appeal, especially for people with modest savings who are trying to stretch every dollar in retirement.
But what can you realistically expect your monthly payments to be if you put $50,000 into an annuity? Let's break down the potential monthly payouts and explore ways to get the most from your investment.
Learn more about the benefits of annuities here.
How much will a $50,000 annuity pay per month?A $50,000 annuity will provide significantly smaller payments than a six-figure investment, but it can still deliver meaningful income, especially when combined with Social Security or other retirement funds. Here's a snapshot of what monthly payouts might look like for a $50,000 immediate fixed annuity, according to an analysis of Cannex data compiled by Annuity.org:
If the $50,000 annuity is purchased at age 60, a man can expect around $294 per month, while a woman the same age would receive slightly less — about $285 per month — due to her longer life expectancy.If the $50,000 annuity is purchased at age 65, the payments increase. A man would receive approximately $322 per month, and a woman would collect about $309 monthly.At age 70, the payout rises again. A man might receive $364 per month, and a woman would likely get $344 monthly.For someone who waits until age 75 to purchase a $50,000 annuity, the monthly income could be close to $425 for a man and $395 for a woman.Note, though, that the math behind these numbers is based on several factors, including your age, gender and the specific structure of your annuity contract. The interest rate environment can also play a role. A higher-rate environment, for example, will lead to larger monthly payments. Should the rate environment dip, though, the monthly payments will be lower as a result.
For example, if you choose a joint life annuity, which is a type of annuity that continues making payments to your spouse after your death, the monthly amounts will be lower. A 65-year-old couple investing $50,000 might receive around $280 per month, as the payments are designed to last for as long as either spouse is alive.
Or, if you're considering a deferred annuity, one where payments begin years after your purchase, you may receive higher monthly income later. However, you'll have to wait for the payments to start and, in turn, could potentially risk missing out on income when you need it most.
Compare your annuity options and find the right one for your needs today.
Is a $50,000 annuity worth it?Whether a $50,000 annuity is worth it depends largely on your broader financial picture and your goals for retirement. In general, though, this amount of annuity could be worth it for the following reasons:
To supplement other income sources: A $300 to $400 monthly payout won't cover all your expenses, but it can be a helpful supplement to Social Security, pensions or part-time work. It might also be enough to cover a recurring bill, like utilities, groceries or insurance premiums, which could ease financial pressure.
To provide peace of mind: For some, the real value of an annuity isn't the size of the check. It's the predictability. If you've been worried about drawing down your savings too quickly or struggling to budget during market dips, a guaranteed monthly payout can reduce anxiety.
To protect against longevity risk: One of the biggest financial risks in retirement is living longer than expected and running out of money. An annuity provides a buffer against this, especially if you opt for a lifetime payout structure.
It's important to understand, though, that once you purchase an annuity, your money is mostly locked in. If unexpected expenses arise and you need quick access to cash, an annuity won't offer much flexibility. That's why it's rarely a good idea to put all your savings into one.
You should also know that if you purchase a non-qualified annuity using after-tax dollars, part of your monthly payout will be taxable, and part will be considered a return of principal, which is not taxed. But if you fund it with pre-tax dollars, like from a traditional IRA, the entire monthly payment will be taxed as ordinary income.
The bottom lineA $50,000 annuity won't transform your retirement finances on its own, but it can still play a meaningful role in your overall income strategy. Depending on your age, gender, and contract details, you might receive anywhere from $285 to $425 per month, or possibly more if you delay payments or add inflation protection.
Before committing, though, make sure to shop around, understand the terms and consider how this fits into your broader financial goals. While it's not a perfect solution for every retiree, a $50,000 annuity can provide something many other investments can't: consistent income you can count on, no matter what the economy throws your way.
Angelica Leicht