When you’ve built a nest egg of $1,000,000, the next question feels simple—but it has huge implications: how much does a $1 million annuity pay, and will that income be enough? The right way to answer that is not with generic “average payout” tables. It’s with your age, your timing, your state, and your income goals entered into a calculator—then confirmed with side-by-side carrier illustrations.

At Diversified Insurance Brokers, we help retirees and pre-retirees turn a portion of savings into a paycheck they can’t outlive by comparing income-focused annuity options from more than 100 highly rated carriers. This page shows you how $1,000,000 can be structured for lifetime income, what choices matter most (single vs. joint, now vs. later, level vs. increasing), and how to coordinate annuity income with Social Security and the rest of your portfolio—without relying on “illustrative example” numbers that can quickly become outdated or irrelevant.

How a $1,000,000 Annuity Turns into Income

When you move $1,000,000 into an annuity designed for retirement income, you’re converting a lump sum into a contractual income promise. The “pay” amount is determined by a handful of variables that you can control: when income starts, whether it must cover one life or two, and which protections you want built into the contract.

Most people are surprised by how much design matters. The word “annuity” can refer to very different structures—some are built almost entirely around income, while others are designed to protect principal and grow value first, then create lifetime income as an option. Because of that, the most useful question is not “what’s the payout rate?” It’s:

“What income structure fits my plan—and what does that structure pay for my age and timing?”

That’s why a calculator-first approach works so well. It helps you see how the same $1,000,000 behaves under different decisions, and it points you toward the category that best matches your goals.

Lifetime Income Calculator for a $1,000,000 Annuity

If you want a real answer without guesswork, start here. The calculator below lets you model income timing and options so you can see ballpark results quickly—then we can match those inputs to carrier illustrations with exact contract terms.

How to Think About “What It Pays” Without Using Generic Tables

Online payout tables often create false confidence. They usually assume a specific age, a specific state, a specific option set, and a specific rate environment—then present the result as if it applies broadly. But with a $1,000,000 annuity, small choices can change results materially, especially if you’re comparing single vs. joint income, different survivor percentages, different refund guarantees, or different income start dates.

Instead, use this framework:

Step 1: Decide what the $1,000,000 is supposed to do—cover essentials, cover a “base layer” of retirement spending, protect a spouse, reduce reliance on portfolio withdrawals, or create a future paycheck that turns on later.

Step 2: Use the calculator to test ages, start dates, and payout options until you find a structure that matches your goal.

Step 3: Request carrier illustrations built around that same structure so you can compare actual contracts apples-to-apples.

This approach keeps the decision grounded in outcomes (your plan) rather than marketing headlines (someone else’s assumptions).

Key Factors That Determine How Much $1,000,000 Can Pay

Your age and income start date

Age is one of the biggest levers in annuity income. In general, income that begins later tends to be higher than income that begins earlier, because the insurer expects to pay for fewer years. That does not automatically mean “wait.” It means timing should be coordinated with your plan: Social Security timing, retirement date, pension start, RMD planning, and how much portfolio income you want early vs. later.

Some retirees purchase an annuity in one phase and start income in another. Others start immediately because they want a strong income floor right away. There is no universal best answer—only what best fits your cash-flow needs and risk tolerance.

Single life vs. joint life (and survivor choices)

A single-life structure is priced to pay as long as one person lives. A joint-life structure is priced to continue income as long as either spouse is alive, which often reduces the starting payment in exchange for survivor security.

Within joint life, many designs allow a survivor percentage choice. That choice shapes how the survivor’s income looks if one spouse passes away first. If the household would be vulnerable after losing one Social Security check or one pension election, joint income can be a powerful way to protect the survivor’s lifestyle.

Immediate income vs. deferred income

Some annuity designs are built for a paycheck now. Others are built for a paycheck later. Deferred income can be especially valuable if you do not need full income immediately and want to lock in a future stream that begins later in retirement, when longevity risk becomes more important and simplicity often becomes more valuable.

Many higher-net-worth retirees use a “phase plan”: portfolio withdrawals early, stronger guaranteed income later. The right structure depends on what you want the first decade of retirement to look like—and what you want protected in later decades.

Product type: income-only vs. income-with-flexibility

“Annuity” is not one product. At a high level, you can think of three common income paths:

Income-first contracts (designed primarily to convert premium into payments). These are often used to cover essential spending with maximum predictability.

Income-later contracts (designed to lock in a future paycheck that starts on a date you choose). These are commonly used as longevity protection.

Income-optional contracts (designed to protect principal and potentially grow value, with lifetime income available through a rider structure). These are often used when someone wants a clearer future income plan but still values access, flexibility, or a different balance of trade-offs.

The best category is the one that fits your goal—not the one that happens to have the most attractive headline in an ad.

Additional guarantees and protections

Many retirees want two things beyond income: protection if they pass away earlier than expected and protection if purchasing power erodes over time. Contracts address those concerns through optional guarantee designs. Adding protections can lower starting income because the insurer is taking on additional obligations. The right mix depends on what you value most: higher starting income, survivor security, beneficiary certainty, or a structure that may increase over time.

Comparing a $1,000,000 Annuity to the 4% Rule

Many retirees are familiar with the 4% rule concept: withdraw a set percentage from a diversified portfolio and adjust over time. That framework emphasizes flexibility and portfolio control, but it does not provide a contractual guarantee.

A lifetime income annuity is a different tool. Instead of following a withdrawal rule and hoping market returns line up with spending, you convert part of your savings into a guaranteed income stream backed by the contract. The trade-off is straightforward: you typically give up some liquidity and upside potential on the annuitized dollars in exchange for predictable income and longevity protection.

For many retirees, the best solution is not “annuity vs. portfolio.” It’s “annuity + portfolio.” Use guarantees to cover the expenses you do not want exposed to market timing, and keep other assets invested to maintain flexibility, growth potential, and legacy planning.

How a $1,000,000 Annuity Fits With Other Income Sources

A $1,000,000 annuity is usually one component of a larger retirement income plan. It can complement Social Security, pensions, IRAs, 401(k)/403(b) balances, and taxable investments by taking a clear role inside the plan.

Common planning uses include:

Covering essential expenses: creating a baseline of predictable income so housing, utilities, and healthcare-related spending are less dependent on portfolio withdrawals.

Reducing sequence-of-returns risk: lowering the need to sell investments during a market downturn just to fund monthly expenses.

Supporting Social Security timing: creating income flexibility so you can claim benefits in a way that aligns with your household plan.

If you want to explore how those pieces interact, these pages are helpful next steps: What is the best retirement income annuity? and How Social Security and annuities work together.

Comparing Different Annuity Sizes to $1,000,000

One practical way to decide how much to allocate is to compare different premium levels and see how the income “role” changes in your plan. If you’re unsure whether $1,000,000 is the right allocation, compare your results to other levels:

• How much does a $500,000 annuity pay?
• How much does a $2 million annuity pay?

Many retirees also split a larger allocation across multiple contracts to diversify carrier exposure and to create income that starts at different times. That can reduce the feeling of “locking everything in at once” while still accomplishing the goal of building a dependable income floor.

Is a $1,000,000 Annuity the Right Move for You?

A $1,000,000 annuity can be a powerful tool if you want a reliable income stream and you value peace of mind that part of your retirement plan is protected from market swings and longevity risk. It can also be especially appealing if you don’t have a traditional pension and want to create a similar effect—a “personal pension” built from your own savings.

At the same time, annuities are not an all-or-nothing decision. Some people want substantial guaranteed income. Others want a smaller income floor and more liquidity. The right plan is the one that matches your goals for lifestyle, flexibility, survivor protection, and legacy.