Latest news with #annuity
CBS News
10 hours ago
- Business
- CBS News
What happens to an annuity when a person dies?
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. An annuity can provide reliable retirement income, but it's important to know whether it will continue to pay your loved ones after you die. Getty Images In today's uncertain financial climate, many Americans are turning to annuities as a way to guarantee income during retirement. With inflation cooling but still problematic, market volatility causing jitters and traditional pensions nearly extinct, annuities offer something rare: predictable, steady payouts for life. But while retirees often understand the basics of how annuities work during their lifetime, there's one question that doesn't always get asked soon enough: What happens to that annuity when the person who owns it dies? It's an important question, especially if you're counting on that annuity to support a surviving spouse or want to leave something behind for your children. And, the answer depends on several factors, including the type of annuity purchased and the options selected at the time of signing the contract. That's why understanding the potential outcomes ahead of time is key. If you don't plan ahead, that stream of income could dry up, and in some cases, the insurer might keep the remainder of the money. So, whether you're shopping for an annuity, currently receiving payouts or managing a loved one's estate, it's critical to know what happens to an annuity after the annuitant dies. Find out how to add an annuity to your retirement portfolio today. What happens to an annuity when a person dies? What happens to an annuity after death depends largely on the type of annuity and the contract terms set in place. Here's what happens with the common types of annuities after the person who owns it dies: Single life annuity : If the annuity is a single life annuity, meaning that it's set to pay income only for the life of the annuitant, the payments usually stop once the person dies. That means even if the annuitant dies early into the payout period, the insurance company keeps the remaining balance. This might sound harsh, but it's part of the tradeoff for getting higher monthly payments while the person is alive. : If the annuity is a single life annuity, meaning that it's set to pay income only for the life of the annuitant, the payments usually stop once the person dies. That means even if the annuitant dies early into the payout period, the insurance company keeps the remaining balance. This might sound harsh, but it's part of the tradeoff for getting higher monthly payments while the person is alive. Joint and survivor annuity : Joint and survivor annuities are a common option for married couples who want to make sure both spouses are covered. If the annuity was structured as a joint and survivor annuity, payments continue to the surviving spouse or named joint annuitant after the original annuitant passes away. That said, the amount may be the same or reduced, depending on the contract. : Joint and survivor annuities are a common option for married couples who want to make sure both spouses are covered. If the annuity was structured as a joint and survivor annuity, payments continue to the surviving spouse or named joint annuitant after the original annuitant passes away. That said, the amount may be the same or reduced, depending on the contract. Fixed period or period certain annuity : Some annuities include a "period certain" feature, which guarantees payments for a set number of years — like 10 or 20 — regardless of whether the annuitant is alive. If the annuitant dies before that period ends, the remaining payments are made to a designated beneficiary. : Some annuities include a "period certain" feature, which guarantees payments for a set number of years — like 10 or 20 — regardless of whether the annuitant is alive. If the annuitant dies before that period ends, the remaining payments are made to a designated beneficiary. Refund options: Other annuities include refund provisions. For example, a cash refund annuity ensures that if the total amount paid out doesn't equal the original investment, the remaining amount is refunded to a beneficiary. This helps ensure that some of the money goes to heirs, even if the annuitant dies early. It's worth noting that in most cases, any payments made to a beneficiary after the annuitant dies are considered taxable income. However, the taxation details depend on whether the annuity was qualified (funded with pre-tax dollars) or non-qualified. Compare your annuity options and secure a reliable retirement income stream now. How to make sure your annuity benefits your loved ones If you're worried about your loved ones' ongoing financial needs, there are steps you can take to make sure your annuity continues to support your family after you die. That said, it takes a bit of upfront planning and a clear understanding of the contract terms to get it right. Start by carefully reviewing the death benefit provisions in your annuity. If you're still in the accumulation phase (i.e., you haven't started receiving payments yet), check whether your contract includes a death benefit rider. This rider can guarantee that your beneficiaries receive the greater of your account value or the total premiums paid, even if your investments have declined. If you've already annuitized (meaning you've started receiving regular income), it's important to confirm whether your contract includes features like a joint payout option or period certain. These choices can't be added after the fact, so what you selected at the start is what determines how much, if anything, your beneficiaries receive. You should also take the time to review and update your beneficiary designations. Life changes, like divorce, remarriage or the death of a previously named beneficiary, can create complications if you haven't kept your documents current. And make sure you name contingent beneficiaries too, in case your primary beneficiary isn't able to inherit. Ultimately, an annuity doesn't have to be a "use it or lose it" investment. With the right setup, it can offer long-term peace of mind for both you and the people you care about. The bottom line Annuities can offer powerful income protection during retirement, but without the right planning, they might not offer the same protection for your loved ones after you're gone. But what happens to your annuity when you die depends largely on the structure of the contract, whether you've chosen survivorship options and who you name as your beneficiaries. To avoid unwanted surprises, take the time to understand your annuity's terms and make sure your designations reflect your wishes. With a few thoughtful decisions, your annuity can serve as more than just a retirement paycheck. It can also be a meaningful part of your legacy.
CBS News
a day ago
- Business
- CBS News
What is the 5-year rule for annuities?
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. Understanding how the five-year annuity rule works now can help you avoid costly mistakes later. Getty Images/iStockphoto In today's uncertain financial environment, annuities can seem like the quiet, dependable retirement funding option, offering guaranteed income and helping protect against outliving your savings. And, with sticky (but cooling) inflation still putting pressure on household budgets and the stock market delivering mixed signals, the idea of guaranteed monthly payouts is even more appealing, especially for those nearing retirement or planning their estate. But while annuities can offer stability, they also come with some complex rules that aren't always obvious at first glance. One of the most important, particularly for those who want to leave an annuity to their loved ones is the five-year rule. This Internal Revenue Service (IRS) regulation isn't about investment performance or insurance guarantees, though. It's about how and when beneficiaries can take money out of an annuity after the original owner dies, and how much they will end up owing in taxes. So, whether you already own an annuity or expect to inherit one, understanding the five-year rule now can help you avoid costly mistakes later. Let's take a look at how that rule works and what you should do to stay ahead of it. Find out how an annuity could benefit you during retirement. What is the 5-year rule for annuities? The 5-year rule is an IRS regulation that affects how non-spouse beneficiaries must take distributions from an inherited annuity when the original contract owner dies. It essentially requires that the entire value of the annuity be distributed, either all at once or in multiple withdrawals, within five years of the original owner's death. Here's the key thing to understand: If the annuity owner dies and the beneficiary doesn't elect a different payout method, like annuitizing the contract over their own life expectancy or taking a lump sum right away, the IRS steps in with the five-year clock. Once that clock starts ticking, the beneficiary has up to five years to drain the account. Fail to meet that deadline, and the IRS could hit you with taxes and penalties. Not all annuities are subject to this rule, however. It generally applies to non-qualified annuities, which are funded with after-tax dollars, and only comes into play when the beneficiary is not a spouse. If a spouse inherits an annuity, they have more flexibility and can often assume the contract as their own, avoiding the five-year requirement altogether. Another important factor to know is that the rule is about distributions, not necessarily when taxes are due. Any untaxed earnings in the annuity become taxable when withdrawn. So if a beneficiary waits until year five and takes a lump sum, that entire withdrawal could be taxed as ordinary income in a single year, potentially pushing them into a higher tax bracket. Compare your top annuity options online now. How the 5-year rule can affect your annuity planning The five-year rule isn't just an obscure footnote. It can have real consequences for how you structure your estate plan and how your loved ones manage an inherited annuity, so it pays to be proactive. Here's how to do that: Plan for your beneficiaries If you're the annuity owner, think carefully about who your beneficiaries are and what kind of payout might make the most sense for them. A younger beneficiary might benefit more from a life expectancy payout rather than being forced to take the money over five years. Working with a financial advisor can help you structure your annuity to give your heirs more flexibility. Make elections early If you inherit an annuity, don't ignore the paperwork. The five-year rule often kicks in by default if the beneficiary doesn't make an election within a certain period (typically 60 days). That means if you don't act, you could lose the opportunity to spread distributions (and the taxes) over a longer period. Watch out for tax traps For beneficiaries, understanding the tax implications is crucial. The funds withdrawn from an annuity are usually taxed as ordinary income, so the larger the withdrawal in any one year, the bigger the potential tax bill. If you wait until the final year of the five-year window and take a lump sum, that entire amount could significantly increase your tax liability. Know when the rule doesn't apply It's also worth noting that the five-year rule is just one of several options available to annuity beneficiaries. In some cases, you can elect a stretch payout based on life expectancy (often called a nonqualified stretch), especially if the annuity allows it and if the beneficiary acts quickly. But if the contract doesn't allow it, or if the beneficiary doesn't make the election, the five-year rule becomes the default. The bottom line The five-year rule for annuities might not be something you think about every day, but it's one of those fine-print details that can have a big impact, especially if you're on the receiving end of an inherited annuity. Whether you're the owner of the annuity or the named beneficiary, understanding how this rule works can save you from major tax headaches and ensure the money is distributed in a way that aligns with your financial goals. In short: Don't wait until you're up against a deadline. If you own an annuity, talk to your advisor about how it fits into your estate plan. And if you inherit one, get help early to make sure you understand your distribution options. The five-year rule isn't flexible, but with the right planning, you can be.
CBS News
a day ago
- Business
- CBS News
How much does a $750,000 annuity pay monthly?
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. If you're looking for big (and predictable) monthly payments during retirement, a $750,000 annuity could be the answer. Getty Images For many older Americans, the transition from saving for retirement to actually spending in retirement can be uncomfortable. After decades of building up your retirement funds, investing wisely and diversely and keeping an eye on market trends, the focus suddenly shifts to preserving what you've saved — and, in many cases, figuring out how to turn it into a steady paycheck. But at a time when inflation is still chipping away at purchasing power and market corrections seem to come without warning, that task can feel more daunting than usual. That's why retirees are exploring guaranteed retirement income solutions, like annuities. Unlike stocks or mutual funds, annuities aren't designed to grow your money. They're designed to pay it back to you, month after month, often for the rest of your life. In other words, annuities are a different kind of financial product with a different goal: replacing uncertainty with predictability. If you've built up a sizable retirement fund and are wondering how far it can take you, you might be wondering what a $750,000 annuity would pay each month. And, while the answer depends on a few key details, the potential income could be more substantial than you think. Learn how to add an annuity to your retirement plan today. How much will a $750,000 annuity pay per month? The exact monthly payout from a $750,000 annuity depends on several key factors, like your age at the time of purchase, your gender and whether you're opting for a single or joint life annuity. The interest rate environment can also play a role, as a higher-rate environment typically equates to larger monthly payouts, while a lower-rate environment does the opposite. Here's what the payouts might look like for a fixed immediate annuity purchased with $750,000, according to an analysis of Cannex data from These payouts reflect lifetime income from an immediate annuity, meaning the income starts shortly after purchase and continues for life: Age 60 : : A 60-year-old male : About $4,430 per month : About $4,430 per month A 60-year-old female : About $4,294 per month : About $4,294 per month A joint life annuity at age 60 : $3,948 per month : $3,948 per month Age 65 : : A 65-year-old male : About $4,857 per month : About $4,857 per month A 65-year-old female : About $4,655 per month : About $4,655 per month A joint life annuity at age 65 : About $4,212 per month : About $4,212 per month Age 70 : : A 70-year-old male : About $5,483 per month : About $5,483 per month A 70-year-old female : About $5,183 per month : About $5,183 per month A joint life annuity at age 70 : About $4,594 per month : About $4,594 per month Age 75 : : A 75-year-old male : About $6,404 per month : About $6,404 per month A 75-year-old female : About $5,952 per month : About $5,952 per month A joint life annuity at age 75 : About $5,131 per month : About $5,131 per month Age 80 : : An 80-year-old male : About $7,844 per month : About $7,844 per month An 80-year-old female : About $7,196 per month : About $7,196 per month A joint life annuity at age 80: About $5,993 per month In general, men with immediate annuities will receive slightly higher payments than women, simply because the average life expectancy for men is shorter, so the insurance company expects to pay out over fewer years. And, if you're purchasing a joint life annuity, which continues paying a surviving spouse after your death, the monthly amount will be lower to account for the longer expected payout period. Likewise, if you want features like inflation adjustments or a guaranteed period, where payments continue to heirs even if you die early, that can reduce your monthly income as well. Compare your top annuity options online now. Is a $750,000 annuity worth it? A $750,000 annuity can be worth it for the right retirees. Whether or not this type of annuity is the right move for you, though, generally depends on what you're looking to accomplish with your retirement savings. One major benefit of a $750,000 annuity is that the income is guaranteed and predictable. For example, at age 70, a man receiving nearly $5,500 per month from his annuity could cover a good portion of his retirement expenses without having to worry about market fluctuations. For couples, it could provide a strong foundation to build the rest of their retirement income plan around. Here's when a $750,000 annuity might be worth it: When you're focused on stability : If your top concern is making sure your basic needs are met no matter what, locking in monthly payments may give you peace of mind. : If your top concern is making sure your basic needs are met no matter what, locking in monthly payments may give you peace of mind. When you don't have a pension : Annuities can function like a do-it-yourself pension for people who don't have one through work. : Annuities can function like a do-it-yourself pension for people who don't have one through work. When you're concerned about outliving your money: Lifetime annuities are one of the few products that protect against longevity risk, or the risk of running out of money in your 80s or 90s. That said, there are also trade-offs to consider. Once you purchase an annuity, your money is mostly locked up. While some contracts allow for limited withdrawals or return-of-premium options, most don't offer the same liquidity you'd get with a traditional investment account. There's also the tax angle: If you buy the annuity with pre-tax dollars (like from a traditional individual retirement account or 401(k)), your monthly payments will be taxed as regular income. If you use after-tax money, a portion of your monthly check will be considered a return of principal and not taxed, but the rest will be. And keep in mind that not all annuities are created equal. Fees, terms and flexibility can vary widely, so it's essential to compare products and consult with a financial advisor before committing. The bottom line A $750,000 annuity can generate between $4,300 and $7,800 per month depending on your age, gender and annuity structure. For retirees who want guaranteed income they can count on, that means this type of annuity is a powerful tool for creating financial security and reducing stress during retirement. But while the payouts can be generous, annuities aren't for everyone. The trade-offs — especially around liquidity and contract terms — mean they should be just one part of a broader retirement strategy. Before buying, take a close look at your full financial picture, including your need for flexibility, your risk tolerance and your other sources of retirement income. In the right situation, though, a $750,000 annuity can offer something the stock market simply can't: steady, worry-free income for the rest of your life.
CBS News
2 days ago
- Business
- CBS News
How much does a $400,000 annuity pay per month?
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. The monthly payments on a $400,000 annuity could be substantial, providing you with a guaranteed income stream during retirement. Getty Images After years of diligently saving, watching markets rise and fall and checking retirement calculators with cautious optimism, many near-retirees now face the real challenge: turning savings into sustainable income. At that point, it's no longer just about growing your money, after all. It's about making it last. And, that shift in mindset has become even more critical in today's climate. After all, inflation may be cooling, but it's still eating into fixed budgets. Market volatility continues to rattle investors. And with people living longer than ever, the fear of outlasting your savings is very real. That's why more Americans are looking to annuities — not as flashy investments, but as practical tools for income stability. These financial products, sold by insurance companies, offer guaranteed monthly income in exchange for a lump-sum payment. Unlike the ups and downs of stocks or bonds, annuities can give retirees a level of financial consistency that's hard to come by elsewhere. But what kind of monthly income can you actually get from a larger investment, like a $400,000 annuity? Find out how to add an annuity to your retirement plan today. How much will a $400,000 annuity pay per month? So, what does a $400,000 annuity really pay? The answer depends on a few key factors, including your age, gender and the type of annuity you choose. That said, it's important to understand the range of potential monthly payouts, as that information can help you decide if locking in guaranteed income is the right move for your retirement plan. Here's a closer look at what you might earn each month from a $400,000 annuity, according to an analysis of Cannex data by Male, age 60 : About $2,362 per month : About $2,362 per month Female, age 60 : About $2,289 per month : About $2,289 per month Joint life, age 60: About $2,105 per month About $2,105 per month Male, age 65 : About $2,590 per month : About $2,590 per month Female, age 65 : About $2,482 per month : About $2,482 per month Joint life, age 65: About $2,246 per month About $2,246 per month Male, age 70 : About $2,923 per month : About $2,923 per month Female, age 70 : About $2,763 per month : About $2,763 per month Joint life, age 70: About $2,449 per month About $2,449 per month Male, age 75 : About $3,415 per month : About $3,415 per month Female, age 75 : About $3,173 per month : About $3,173 per month Joint life, age 75: About $2,736 per month About $2,736 per month Male, age 80 : About $4,192 per month : About $4,192 per month Female, age 80 : About $3,842 per month : About $3,842 per month Joint life, age 80: About $3,202 per month These figures assume a single-life immediate fixed annuity, meaning the payments start right away and continue for the rest of your life. As shown, the older you are at the time of purchase, the higher the monthly income you'll receive because the insurance company expects to make payments for fewer years. The interest rate environment can also play a role in what your monthly payouts are. It's also worth noting that men typically receive higher payments than women since women have longer life expectancies. That means the same $400,000 investment is stretched over more years for a female annuitant, leading to slightly smaller monthly checks. And, if you opt for a joint-life annuity, which continues to pay your spouse after you die, your monthly income will be lower, as evidenced above, but it can be a good trade-off for couples who want lifetime income security for both partners. Learn more about your annuity options and get started now. Is a $400,000 annuity worth it? A $400,000 annuity isn't small change, and whether it's worth it depends, in large part, on your broader retirement plan. But for many retirees, it can offer some big advantages, including: Predictable monthly income Having a fixed amount of money arriving in your bank account every month can reduce a lot of financial stress, especially if you're nervous about withdrawing from your 401(k) or navigating stock market swings. With payments that could range from about $2,300 to $4,000 per month, a $400,000 annuity can meaningfully supplement Social Security or help cover your core expenses. Protection against longevity risk One of the biggest financial unknowns in retirement is how long you'll live. Annuities offer peace of mind because they continue to pay as long as you're alive, even if you live to 100 or beyond. That's something traditional investment portfolios don't guarantee. Freedom from market volatility Unlike individual retirement accounts (IRAs) or mutual funds, annuity payments aren't tied to how the market is performing. That makes them especially attractive when interest rates fluctuate or a market correction is looming. That said, there are trade-offs to be aware of, like: Limited flexibility : Once you invest, your money is locked in. If you need to tap that cash for emergencies, an annuity won't offer the same liquidity as a savings account or brokerage fund. : Once you invest, your money is locked in. If you need to tap that cash for emergencies, an annuity won't offer the same liquidity as a savings account or brokerage fund. Tax treatment : If you purchase the annuity with pre-tax dollars (like from a traditional IRA), your monthly payments will be taxed as ordinary income. With after-tax money, only the interest portion is taxable — the rest is a return of your principal. : If you purchase the annuity with pre-tax dollars (like from a traditional IRA), your monthly payments will be taxed as ordinary income. With after-tax money, only the interest portion is taxable — the rest is a return of your principal. Inflation risk: Most fixed annuities don't automatically adjust for inflation, meaning your buying power could shrink over time unless you specifically purchase inflation protection (which usually reduces the initial payout). The bottom line A $400,000 annuity can be a powerful piece of your retirement puzzle. Depending on your age and gender, it could deliver anywhere from around $2,200 to $3,400 in monthly income, enough to cover essentials or create some extra breathing room in your budget. Still, annuities aren't the right solution for every person. Before committing such a large portion of your savings, it's important to weigh the trade-offs, like reduced liquidity, potential tax implications and inflation risks. You should also compare the options, ask questions and consider working with an expert who can help you find the right fit.
CBS News
4 days ago
- Business
- CBS News
How much does a $300,000 annuity pay per month?
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 (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.
