How much does a $300,000 annuity pay per month?

CBS News

4 days ago

We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms.
A $300,000 annuity could help your retirement funds grow substantially, but it won't be the right tool for every retiree.
the_burtons/Getty Images
As retirement approaches, many Americans find that traditional savings strategies may not be enough to keep up with today's financial realities. From unpredictable market swings to the lingering effects of inflation on groceries, housing and healthcare, it's getting harder to stretch every dollar in the current economic landscape, and that's especially true for those who are no longer earning a paycheck. That's why more retirees are looking beyond the usual investment accounts and turning to income solutions, like annuities, that offer stability, not speculation.
Annuities have become increasingly popular recently for their ability to deliver guaranteed monthly payments, no matter what's happening in the market. While these retirement tools aren't a solution for every senior or retiree's needs, they can serve as a valuable source of guaranteed income when used strategically. And, with interest rates still elevated, there may be no better time to consider locking in a stable return, as the amount of your monthly annuity payment can be greater in a high-rate environment.
But if you're sitting on a large chunk of retirement savings — let's say $300,000 — you may be wondering how far that money can go in annuity form. So, how much monthly income could a $300,000 annuity really provide? Let's take a closer look at the numbers and explore whether this type of investment is worth considering.
Find out how an annuity could benefit you during retirement.
How much will a $300,000 annuity pay per month?
A $300,000 annuity can provide a meaningful stream of monthly income, especially for older retirees. According to monthly payment estimates from Annuity.org (based on an analysis of Cannex data), here's what you could expect from an immediate fixed annuity purchased with $300,000, depending on your age and gender:
At age 60:
A 60-year-old man could receive payments of about $1,771 per month
A 60-year-old woman could receive payments of about $1,717 per month
A joint life annuity at age 60 would offer payments of about $1,579 per month
At age 65:
A 65-year-old man could receive payments of approximately $1,942 per month
A 65-year-old woman could receive payments of about $1,861 per month
A joint life annuity at age 65 would offer payments of about $1,684 per month
At age 70:
A 70-year-old man could receive payments of about $2,192 per month
A 70-year-old woman could receive payments of roughly $2,072 per month
A joint life annuity at age 70 would offer payments of about $1,837 per month
At age 75:
A 75-year-old man could receive payments of approximately $2,561 per month
A 75-year-old woman could receive payments of about $2,379 per month
A joint life annuity at age 75 would offer payments of about $2,052 per month
At age 80:
An 80-year-old man could receive payments of approximately $3,143 per month
An 80-year-old woman could receive payments of about $2,881 per month
A joint life annuity at age 80 would offer payments of about $2,401 per month
So, why do the payouts increase with age? It's simple: The older you are when you buy the annuity, the fewer monthly payments the insurance company expects to make over your lifetime, so the monthly amount goes up. Gender also matters. Because women tend to live longer than men, their monthly payments are generally lower than men's when all else is equal.
Keep in mind, though, that these figures reflect immediate fixed annuities, which start paying right away and offer a level payout for life. If you choose a joint life annuity, which continues payments to a surviving spouse, the monthly income will be lower. Likewise, if you opt for another type of annuity or features like inflation protection, you can expect the payments to differ from what's outlined above.
Fluctuations within the interest rate environment can also play a role in what your monthly annuity payments are. For example, a higher-rate environment will lead to larger monthly payments, but if the rate environment drops, your monthly payment will be lower.
Compare your annuity options and get started today.
Is a $300,000 annuity worth it?
Whether or not a $300,000 annuity is worth it generally depends on your financial goals, risk tolerance and other sources of retirement income. So, you'll need to weigh all the factors that could impact you before making a decision. Still, there are some compelling reasons to consider using a portion of your savings to purchase one, including:
Predictable income, no matter what : In uncertain markets, knowing that you'll receive a fixed monthly check, regardless of stock performance or interest rate shifts, can be comforting. If you're someone who finds market volatility stressful, annuities can bring peace of mind.
In uncertain markets, knowing that you'll receive a fixed monthly check, regardless of stock performance or interest rate shifts, can be comforting. If you're someone who finds market volatility stressful, annuities can bring peace of mind. Protection against outliving your savings : Annuities help mitigate longevity risk, or the danger of running out of money in your 80s or 90s. That's a very real concern, especially as life expectancies rise. A lifetime annuity guarantees income for as long as you live, and in some cases, for your spouse's lifetime as well.
Annuities help mitigate longevity risk, or the danger of running out of money in your 80s or 90s. That's a very real concern, especially as life expectancies rise. A lifetime annuity guarantees income for as long as you live, and in some cases, for your spouse's lifetime as well. A strong supplement to Social Security: While Social Security offers a baseline of monthly income, it often isn't enough to cover all your needs. A $300,000 annuity could add another $2,000 or so per month to your budget, depending on age and gender, making it easier to cover essentials or enjoy a more comfortable lifestyle.
That said, annuities are not liquid. Once you hand over that $300,000, the money is no longer easily accessible. That makes it critical to avoid investing all your savings into one account. Annuities work best when they're part of a diversified strategy, with some funds kept in liquid accounts for emergencies and flexibility.
Taxes also play a role. If your annuity is funded with pre-tax dollars, like from a traditional individual retirement account (IRA), your monthly payments will be taxed as ordinary income. If it's funded with after-tax dollars, only the earnings portion will be taxable.
The bottom line
A $300,000 annuity can generate a solid amount of monthly income — anywhere from roughly $1,700 to over $3,000 depending on your age and contract terms. That level of predictability can make a big difference in retirement, helping cover fixed costs or supporting a more comfortable lifestyle.
Still, it's important to weigh the pros and cons before committing. Annuities offer unique benefits like guaranteed income and protection against outliving your savings, but they also come with limited flexibility and potential tax implications. For many, the right move is to use annuities to complement Social Security and other savings or retirement income streams, not replace them.
And, as with any financial product, it pays to shop around and read the fine print before locking in a contract. But for those seeking steady retirement income in a turbulent world, a $300,000 annuity may be a smart part of the plan.