Amid today's unusual economic environment, many retirees and near-retirees are shifting their retirement planning from growth to stability. With market instability becoming more common, inflation eating away at spending power and interest rates stuck at higher-than-normal levels, having a reliable stream of retirement income can bring peace of mind, and that's where annuities come into play. These financial products turn a lump sum of savings into steady monthly payments for life (or for a set period), making them a popular choice for people who want predictability.

But figuring out exactly how much income you'll receive from an annuity isn't always a straightforward process. There's no universal answer for what your annuity payments will be, as the monthly payments depend heavily on a variety of factors, including your age, the amount you invest, the type of annuity you choose and even the current interest rate environment. That can complicate things a bit in terms of estimating the payouts

Still, there are ways to get a clear idea of what your monthly annuity payment would be. Below, we'll illustrate how to figure out what your annuity might pay you each month, plus a few shortcuts to help you run the numbers quickly.

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How to determine what your monthly annuity payout will be

Before we do the math, let's break down the key factors that help determine your monthly annuity payout, which include:

Your initial investment amount

The more money you invest in an annuity, the larger your monthly payout will be. For example, a $500,000 annuity will generate more monthly income than a $250,000 annuity, all else being equal. Most insurance companies offer online calculators to give you quick estimates based on the lump sum you plan to invest.

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Your age at the time of purchase

The older you are when you start receiving payments, the higher those payments will be, as the insurance company expects to make payments for fewer years. For instance, someone who buys an immediate annuity at 70 will generally receive a higher monthly income than someone who buys the same annuity at 60.

Gender (in some cases)

Women tend to live longer than men, and annuity providers account for that in their payment formulas. As a result, female annuitants often receive slightly lower monthly payments than males of the same age, all other factors being equal. Some companies use unisex rates, but many still apply gender-based pricing.

Type of annuity

There are and each affects your monthly income differently:

• Immediate fixed annuities: You pay a lump sum and start receiving payments right away, offering you stable, predictable monthly income.
• Deferred annuities: These let your investment grow tax-deferred for a set number of years before payouts begin. You can opt for a lump sum or convert the account into guaranteed monthly income.
• Variable or indexed annuities: These offer the potential for higher income based on market performance but may also come with more risk or fees.

Current interest rate environment

Interest rates impact how much insurers are willing to pay you each month. When rates are high, annuity payouts tend to be higher because insurers can earn more from investing your premium. Conversely, low-rate environments often mean lower payouts.

How to estimate your annuity payout

While insurers use complex actuarial models, there are a couple of basic financial formulas that can help you estimate monthly payments from a fixed immediate annuity. Here's what they are:

A simplified version based on common assumptions

If you're just trying to get a rough idea of your monthly annuity payout, this formula offers a quick shortcut:

Estimated monthly payout ≈ (Investment amount) ÷ (Payout period in months)

Note, though, that this only works well for fixed-period annuities (e.g., "pay me for 20 years") and assumes no interest growth. In other words, this method underestimates your payout compared to real annuities, because actual annuities include interest growth and mortality credits. So, this formula is typically best used as a conservative baseline.

A rule-of-thumb multiplier for lifetime annuities

If you don't want to mess with complex formulas, there's an easy way to estimate your monthly annuity income — especially for lifetime fixed annuities. Here's how it works: 

Insurance companies generally pay you somewhere between 0.6% and 1% of your investment per month, depending on how old you are when the payments begin. The older you are, the higher the percentage because your expected payout period is shorter. 

And here's the formula:

Monthly income ≈ Investment amount × Age-based percentage

Retirees in their mid‑60s to mid‑80s shopping for immediate annuities today can expect annual payout rates of roughly 6.5% to 10.5%, depending on age and payout option. To convert that to a monthly percentage, you divide by 12, so a 7.6% annual rate, for example, becomes approximately 0.63% per month.

Here's a simple breakdown of how those percentages could shake out for single-life annuities:

• Payments that start at age 60: 0.60%
• Payments that start at age 65: 0.68%
• Payments that start at age 70: 0.76%
• Payments that start at age 75: 0.85%
• Payments that start at age 80: 0.95%

So, if you're 70 and buy a $300,000 annuity, you can estimate your monthly payout like this:

$300,000 × 0.76% = $2,280 per month

Remember, though, that these estimates apply to single-life immediate fixed annuities without extra features. If you opt for a joint annuity or include a refund or inflation rider, your monthly income will likely be lower.

The bottom line

Annuities can be a smart way to create steady, predictable income in retirement, but figuring out exactly how much you'll receive each month takes a bit of digging. While there's no universal formula that applies to everyone, using tools like age-based payout estimates or simple math shortcuts can give you a reliable starting point.

Just keep in mind that real payouts depend on more than just your investment amount. Your age, the type of annuity you choose, and any added features like spousal benefits or inflation protection can all change the final number. That's why it's smart to request quotes from multiple insurers and review them side by side before making a decision.