How much does a $200,000 annuity pay monthly?

CBS News

3 days ago

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If you're planning to invest in a $200,000 annuity for retirement, you should know what the monthly payments could look like now.
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It can be tough to prepare for retirement amid today's economic uncertainty, and even retirees who've planned diligently are feeling the pressure of the current landscape. One major issue is that the stock market continues to swing unpredictably, making it increasingly difficult to use stocks and bonds to adequately prepare for retirement. Plus, everyday expenses remain stubbornly high, and traditional retirement income sources, like pensions, are less common than they used to be. In turn, there is a pressing need for older adults to identify steady, reliable income that won't disappear with the next market downturn.
For that reason, annuities are starting to look more attractive. These insurance-based products are intended to convert a chunk of your retirement savings into predictable monthly income for life. While they may not offer the same growth potential as investing in stocks or real estate, annuities are built to provide stability, which is precisely what many retirees are looking for. The trade-off is that you give up access to your principal in exchange for guaranteed checks every month.
So how much income can you actually get from an annuity? If you're thinking of investing $200,000 into this type of retirement product, there are things to know about your potential monthly payout — and whether that's a smart move for your retirement goals.
Learn more about the benefits an annuity could offer you.
How much does a $200,000 annuity pay monthly?
In general, a $200,0000 annuity won't offer monthly payments that are large enough to cover all your expenses during retirement. However, this type of annuity can still deliver a significant amount of income and can be useful for supplementing your monthly Social Security payments or other retirement income sources. According to an analysis of Cannex data by Annuity.org, here's what a $200,000 immediate fixed annuity might pay monthly:
At age 60 :
: A 60-year-old man could receive a monthly payment of about $1,180 per month
A 60-year-old woman would get a monthly payment of about $1,144 per month
At age 60, a joint annuity would pay about $1,052 per month
At age 65 :
: A 65-year-old man might receive about $1,294 per month
A 65-year-old woman would likely collect $1,240 per month
At age 65, a joint annuity would pay about $1,122 per month
At age 70 :
: A 70-year-old man could get $1,461 per month
A 70-year-old woman might receive $1,381 per month
At age 70, a joint annuity would pay about $1,224 per month
At age 75 :
: A 75-year-old man's monthly payment could reach $1,707
A 75-year-old woman might earn around $1,586
At age 75, a joint annuity would pay about $1,367 per month
At age 80 :
: An 80-year-old man's monthly payment would be about $2,095
An 80-year-old woman might earn around $1,920 per month
At age 80, a joint annuity would pay about $1,600 per month
It's important to note, though, that these payouts are based on a single life immediate fixed annuity, which means the payments begin right away and last for the rest of your life. Monthly payouts are also based on factors like your age, gender, your annuity contract's structure and the interest rate environment. For example, a higher-rate environment would lead to larger monthly payments, while a lower-rate landscape would result in smaller monthly payments.
And, as showcased above, women typically receive slightly smaller payments because of their longer life expectancy, which means the annuity payments must stretch further. Similarly, joint annuities, which are a type of annuity that covers two people, such as a married couple, will typically pay less each month because the insurance company is promising income for a longer combined timespan.
Annuities with added features like cost-of-living adjustments or guaranteed minimum periods, meantime, may reduce your monthly check but offer valuable trade-offs.
Compare your options and find the right annuity now.
Is a $200,000 annuity worth it?
Whether or not a $200,000 annuity is worth it depends on what you want your money to do. For many retirees, a $200,000 annuity generally isn't meant to replace all income. It's designed to complement existing benefits like Social Security, a pension or retirement account withdrawals. Here's how to think about whether it's a good fit:
A $200,000 annuity might be worth it if:
You want peace of mind. There's value in knowing exactly how much you'll receive each month, regardless of what happens in the market or to inflation (if your annuity includes an inflation rider).
There's value in knowing exactly how much you'll receive each month, regardless of what happens in the market or to inflation (if your annuity includes an inflation rider). You're worried about longevity risk. Annuities are one of the few tools that can help protect against outliving your money.
Annuities are one of the few tools that can help protect against outliving your money. You don't want to manage investments. Not everyone enjoys checking the markets or rebalancing portfolios. An annuity lets you set it and forget it.
But a $200,000 annuity might not be ideal if:
You need liquidity. Once you buy an annuity, that money is typically locked in. If you need access to a large sum for a medical emergency or home repair, your annuity won't help.
Once you buy an annuity, that money is typically locked in. If you need access to a large sum for a medical emergency or home repair, your annuity won't help. You have legacy goals. Annuities prioritize income over inheritance. Unless you add a death benefit rider (which will lower your monthly payments), your heirs may receive little or nothing from your annuity.
Annuities prioritize income over inheritance. Unless you add a death benefit rider (which will lower your monthly payments), your heirs may receive little or nothing from your annuity. You could invest for higher returns. If you're financially secure and comfortable with risk, other investments might yield more over time, though with no guarantees.
It's also worth considering how you fund the annuity. If you use pre-tax dollars, like the funds from a traditional individual retirement account (IRA), your entire payout will be taxed as ordinary income. If you use after-tax money, only the interest portion of your payments will be taxable.
The bottom line
A $200,000 annuity can provide reliable monthly income, often between about $1,100 and $2,100, depending on your age, gender and contract terms. That kind of consistent income can offer peace of mind for retirees who are seeking predictability and a hedge against outliving their savings.
Still, annuities aren't the right option for every retiree. Before committing, consider your other income sources, your need for liquidity and whether you're comfortable locking up a large chunk of cash. For many retirees, a $200,000 annuity won't be the entire solution, but it can be a powerful piece of the puzzle when it comes to building a retirement plan you can count on.