Before you put $100,000 into an annuity, you need to know what your monthly payouts could look like.
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As more Americans enter retirement amid today's climate of economic uncertainty, the opportunities that allow for predictable income after you stop working are taking center stage. Social Security benefits do this, but while that money can help round out your retirement budget, it's generally not enough to comfortably cover all your living expenses — especially as prices for essentials, like housing, groceries and medical care, continue to climb.
That's a large part of why annuities are gaining attention again. They offer steady income payments that can help retirees avoid outliving their savings. And, in today's higher-rate environment, fixed annuities may be particularly appealing, as your annuity payouts are closely tied to the interest rate climate. The higher the rate, the more the insurer can earn on your money, which translates into larger monthly payments for you.
But how much will a $100,000 annuity actually pay if you're 70 and ready to buy one today? That answer depends on a few key factors.
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How much will a $100,000 annuity pay monthly if bought at age 70?If you're considering buying a $100,000 annuity at age 70, you're likely looking for a way to turn a portion of your retirement savings into a reliable income stream. But how much monthly income can you actually get from that type of investment at that age? While the answer depends on a few key factors, recent data can offer a useful snapshot of what you might expect.
According to an analysis of Cannex data by Annuity.org, if you're a 70-year-old man purchasing a $100,000 immediate fixed annuity, you could expect to receive about $729 per month for life. A 70-year-old woman, meanwhile, might receive around $689 per month. And if you choose a joint life annuity — which continues payments to your spouse after your death — the monthly income drops to roughly $620 per month.
Why the difference? It comes down to actuarial math and risk. Here's what typically impacts your monthly annuity payout:
Gender: Women tend to live longer than men, which means annuity providers expect to pay women for a longer period. As a result, the monthly payout for a woman is lower than that for a man of the same age, assuming all other factors are equal.Type of annuity: There are different types of annuities, but in this case, we're talking about immediate fixed annuities. These begin payments right away and are based on a fixed rate at purchase. If you choose a joint life annuity, which covers two people, the payout is lower because the insurer is taking on more longevity risk, as payments continue until both individuals die.The interest rate environment: Higher interest rates allow insurers to offer higher monthly payouts. Right now, annuity rates are more favorable than they were just a few years ago, making this a potentially smart time to lock one in. But if rates fall again in the future, new annuity buyers could get smaller monthly checks.Optional features: Some annuities come with add-ons like cost-of-living adjustments or a guaranteed minimum payout period. These can reduce your initial monthly payment but may be worth it for long-term peace of mind.Your age: It's worth noting that the older you are when you buy an annuity, the higher your monthly payout tends to be. That's because the insurance company expects to make payments for fewer years.So, while the monthly payments outlined above may not sound like life-changing amounts, remember that these are guaranteed for life, and that kind of security is tough to beat in today's volatile markets.
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How to determine if a $100,000 annuity is worth itWhether or not an annuity is a good fit generally depends on your personal goals, health and broader retirement plan. That said, there are certain indicators that a $100,000 annuity could make sense for you, specifically when:
You value guaranteed income: If you're worried about outliving your savings or just want a predictable source of income alongside Social Security, a fixed annuity can offer that peace of mind.You're in good health: If you're healthy and expect to live well into your 80s or 90s, you may get big value from an annuity. The longer you live, the more you benefit from the steady payments.You want simplicity: An annuity requires no active management. Once you buy it, you receive the income automatically. That's a big perk for retirees who don't want to deal with market fluctuations or portfolio drawdowns.On the flip side, annuities are not liquid investments. You can't easily access your money if you're in a pinch, so you should only use a portion of your savings to buy one. You should also consider opportunity cost. If your $100,000 could grow significantly in the market and you're comfortable with some risk, you might ultimately generate more wealth another way. But the market doesn't guarantee returns. Annuities, however, do.
The bottom lineA $100,000 annuity purchased at age 70 can provide a solid stream of monthly income of about $729 for men, $689 for women or $620 for a joint life policy right now. While that alone likely won't cover all your retirement expenses, it can form a strong foundation for your retirement plan, especially when combined with Social Security and other savings. So, if guaranteed income and financial predictability matter to you, an annuity may be well worth the trade-off in liquidity. Just make sure it fits into your broader financial strategy before locking in.
Angelica Leicht