Lifetime Annuity Rates Calculator
*Rates are estimates based on market averages. Actual rates vary by provider and health status.
How a Lifetime Annuity Works
A lifetime annuity is a financial product typically purchased at retirement that provides a guaranteed income for the rest of your life. In exchange for a lump sum (the premium), an insurance company commits to paying you a regular amount, effectively eliminating the risk of outliving your savings.
Key Factors Affecting Annuity Rates
Annuity rates are not fixed; they fluctuate based on several economic and personal variables:
- Age: Generally, the older you are when you purchase the annuity, the higher the payout rate. This is because the insurance company expects to make payments over a shorter duration.
- Gender: Statistically, women have longer life expectancies than men. Consequently, annuity rates for men are often slightly higher as the projected payout period is shorter.
- Health Status: If you have underlying health conditions, you may qualify for an "enhanced annuity," which offers higher rates because of a reduced life expectancy.
- Inflation Protection: Choosing a "Level" payout provides the highest initial income, but its purchasing power decreases over time. An "Escalating" annuity starts lower but increases annually to combat inflation.
Example Calculation
Consider a 65-year-old male investing $250,000 into a level lifetime annuity. If the current market rate is 6.5%, he would receive an annual income of approximately $16,250, or $1,354 per month, guaranteed for life. If that same individual waited until age 75 to purchase, the rate might climb to 8.5%, resulting in $21,250 annually.
Is a Lifetime Annuity Right for You?
Annuities offer unparalleled peace of mind through guaranteed income, regardless of stock market performance. However, they are generally irreversible. Once you pay the premium, you typically lose access to the lump sum in exchange for the steady cash flow. It is often used as a foundation for retirement income alongside social security and other personal investments.