Lifetime Annuity Calculator

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Lifetime Annuity Payout Calculator

Estimate your guaranteed retirement income stream based on current market rates and life expectancy factors.

Male Female
None (Level Payout) 2% Annual Increase 3% Annual Increase

Estimated Lifetime Income

Monthly Payout:

$0.00

Annual Payout:

$0.00

Understanding the Lifetime Annuity Calculator

A lifetime annuity is a financial contract typically purchased from an insurance company that provides a guaranteed income stream for the rest of your life. This calculator helps you estimate the "payout rate"—the percentage of your initial investment that you receive back annually.

How the Calculation Works

Unlike a savings account where you earn interest on a balance, a lifetime annuity payout is calculated based on several actuarial factors:

  • Principal Amount: The total lump sum you invest upfront.
  • Current Age: The older you are when you start the annuity, the higher the monthly payout, as the insurer anticipates a shorter payment duration.
  • Gender: Statistically, women have longer life expectancies than men. Consequently, monthly payouts for women are often slightly lower than for men of the same age.
  • Cost of Living Adjustment (COLA): If you choose to have your income increase annually to keep up with inflation, your initial monthly payment will be lower compared to a level (fixed) payout.

Example Scenario

Imagine a 65-year-old male who invests $500,000 into a single-life immediate annuity with no inflation protection. Based on current actuarial tables, he might receive an annual payout rate of approximately 6.5%. This would result in a guaranteed income of $32,500 per year, or $2,708 per month, for as long as he lives.

Key Benefits of a Lifetime Annuity

The primary advantage of a lifetime annuity is the elimination of "longevity risk"—the risk of outliving your money. Regardless of market volatility or how long you live, the insurance company is contractually obligated to continue payments. This makes it a popular "floor" for retirement planning alongside Social Security and pensions.

Important Considerations

While the security is high, annuities usually involve a loss of liquidity. Once you purchase a standard immediate lifetime annuity, you generally cannot withdraw the principal sum. It is transformed from an asset into a permanent income stream.

function calculateAnnuity() { var principal = parseFloat(document.getElementById("investmentAmount").value); var age = parseInt(document.getElementById("annuitantAge").value); var gender = document.getElementById("annuitantGender").value; var cola = parseFloat(document.getElementById("colaOption").value); if (isNaN(principal) || principal <= 0 || isNaN(age) || age 0) { // Approximate reduction: 1.5% to 2% lower starting rate for 2-3% COLA currentRate -= (cola * 0.7); } // Minimum rate floor to prevent negative or unrealistic numbers if (currentRate < 0.02) currentRate = 0.02; var annualPayout = principal * currentRate; var monthlyPayout = annualPayout / 12; // Display Results document.getElementById("monthlyIncome").innerText = "$" + monthlyPayout.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById("annualIncome").innerText = "$" + annualPayout.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); var estYears = (gender === "male") ? (85 – age) : (88 – age); if (estYears < 10) estYears = 10; // Minimum statistical bracket for calculation document.getElementById("lifeExpectancyNote").innerText = "This estimate is based on a projected " + (currentRate * 100).toFixed(2) + "% annual payout rate for a " + age + "-year-old " + gender + "."; document.getElementById("annuityResult").style.display = "block"; }

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