How Much Does a $3 Million Annuity Pay
Jason Stolz CLTC, CRPC
How much does a $3 million annuity pay? For many retirees and pre-retirees, the real question isn’t just the number—it’s whether that number can reliably cover your lifestyle for the rest of your life. At Diversified Insurance Brokers, we help you turn a lump sum into a predictable “retirement paycheck” by comparing income options from 100+ highly rated annuity carriers. On this page, you can see sample payouts, experiment with a live income calculator, and explore how a personal pension strategy might fit into your broader plan.
Because every annuity is designed differently, the income from a $3 million annuity can vary based on your age, whether the payout is single or joint life, and which guarantees you add (such as inflation protection or beneficiary options). That’s why we encourage you to use the calculator below for ballpark estimates, then request carrier-specific illustrations tailored to your situation.
See Your $3,000,000 Annuity Income
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Lifetime Income Calculator
Use the calculator below to estimate guaranteed lifetime income at different ages. Then we can match those results to specific fixed and fixed indexed annuities from our carrier lineup.
Heads up: This calculator accepts premiums up to $2,000,000.
If you need to model a higher amount, you can estimate by scaling results approximately linearly
(for example, if $2,000,000 pays $X, then $3,000,000 is roughly 1.5 × $X). For precise figures above the tool’s limit, request a personalized illustration.
What a $3,000,000 Annuity Can Pay (Examples)
Every annuity is priced based on life expectancy, current interest rates, and contract design. But it helps to see simple examples. Below are sample annual lifetime income figures for a $3 million annuity using common payout rates at key retirement ages. These are not quotes, just illustrations to show how age and timing may affect income:
- Age 60 – 8.0% payout rate → $240,000/yr (~$20,000/mo)
- Age 65 – 8.2% payout rate → $246,000/yr (~$20,500/mo)
- Age 70 – 8.5% payout rate → $255,000/yr (~$21,250/mo)
At the time of publication, these payout rates represent reasonable, illustrative ranges for income-focused annuities. Actual payouts vary by carrier, product, rider selection, and state availability. Joint-life and inflation-adjustment features typically reduce the starting income to reflect the additional guarantees.
Why Many Retirees Create a “Personal Pension”
For households with $3 million or more in liquid assets, the challenge usually isn’t saving—it’s converting those assets into stable, tax-efficient income. A properly structured annuity can function like a private pension, supplying a base paycheck so you’re not relying solely on market performance or the 4% rule.
When you use a fixed or fixed indexed annuity for income, your principal is protected from market losses, subject to the claims-paying ability of the issuing insurer. That means your “retirement paycheck” can continue even in years when stocks are down. Many of our clients use an annuity to cover essential expenses (housing, food, healthcare, insurance premiums) and then keep the rest of their portfolio invested for growth, legacy, or discretionary spending.
This structure can be especially powerful for couples who want to know that income will continue for both lives. A joint-life annuity payout can protect a surviving spouse from needing to dramatically cut expenses later on, even if markets underperform or one partner’s pension benefit drops after death.
How Payouts Are Calculated
Although the examples above are easy to follow, the actual calculation behind an annuity payout involves several moving parts:
- Age at income start: The older you are when payments begin, the higher the payout percentage is likely to be, because the insurance company expects to pay out for fewer years.
- Single vs. joint life: A single-life option generally maximizes income for one person. A joint-life option lowers the payout slightly but continues income for a surviving spouse or partner.
- Product type: A single premium immediate annuity (SPIA), a deferred income annuity (DIA), or a fixed indexed annuity with an income rider all handle guarantees, liquidity, and growth potential differently.
- Guarantee features: Options like period-certain guarantees, cash-refund benefits, or inflation adjustments (COLA) enhance protection but typically reduce the starting monthly income.
- Interest rate environment: Higher prevailing interest rates generally support higher payout factors, while lower rates reduce them. Your quote “locks in” the assumptions at the time of purchase.
Because of these variables, two different $3 million annuity contracts can produce very different income streams. Our role is to show you those trade-offs clearly—carrier by carrier—so you can choose the balance of income, liquidity, and guarantees that fits your goals.
Coordinating with Other Retirement Income Sources
A $3 million annuity plan doesn’t exist in a vacuum. Most clients are also deciding how to blend annuity income with pensions, Social Security strategies, RMDs from IRAs or 401(k)s, and taxable brokerage accounts. One common approach is:
Step 1: Use annuity income to cover essential expenses and some “fun money,” creating a baseline paycheck you can’t outlive.
Step 2: Coordinate the annuity start date with Social Security, so you can delay benefits when appropriate and potentially increase lifetime Social Security income.
Step 3: Use remaining assets more flexibly—for opportunistic investing, family gifts, large purchases, or strategic Roth conversions, knowing your core income is already secured.
This type of planning is especially important at higher asset levels, where taxes, IRMAA surcharges, and estate goals all come into play. A large annuity can be structured to help manage those issues while delivering strong, predictable income.
Who a $3,000,000 Annuity Strategy May Fit Best
Not everyone with $3 million should put all of it into an annuity—but many people benefit from turning a portion into guaranteed income. A $3 million annuity may be worth exploring if you:
- Want a reliable retirement paycheck that continues no matter what markets do.
- Are a high-net-worth investor who prefers to shift part of your portfolio from growth to guaranteed income.
- Are part of a couple that prioritizes joint lifetime income and wants to protect a surviving spouse’s lifestyle.
- Prefer clarity and simplicity over constantly managing withdrawal rates, order of liquidation, and sequence-of-returns risk.
- Plan to keep other assets invested, but want a safe floor of income to reduce pressure on your portfolio during downturns.
You also don’t have to annuitize the full $3 million. Many clients choose to annuitize only a portion—say $1 million or $1.5 million—while keeping the rest in more flexible vehicles. The calculator at the top of this page can help you test those scenarios, and our team can show you how the numbers look when coordinated across multiple accounts and carriers.
Next Steps: Compare Carriers and Income Designs
If you’re considering turning $3 million (or any amount) into guaranteed lifetime income, the next step is to see real, side-by-side illustrations from multiple insurers. As an independent brokerage, we’re not tied to one company, which allows us to focus first on fit: the right blend of payout level, guarantees, liquidity, and legacy options for your situation.
Use the income calculator above for a quick sense of what’s possible, review the FAQs below, and then request a custom comparison. We’ll translate the fine print into plain English and help you understand how a $3 million annuity strategy could support your broader retirement plan.
Related Pages
- How Much Does a $50,000 Annuity Pay?
- How Much Does a $100,000 Annuity Pay?
- How Much Does a $250,000 Annuity Pay?
- How Much Does a $500,000 Annuity Pay?
- How Much Does a $750,000 Annuity Pay?
- How Much Does a $1 Million Annuity Pay?
- How Much Does a $2 Million Annuity Pay?
- How Much Does a $5 Million Annuity Pay?
- How Much Does a $10 Million Annuity Pay?
- What is the 4% Rule?
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FAQs: What Can a $3 Million Annuity Pay?
How much can a $3 million annuity pay at age 60?
Using an illustrative payout rate around 8.0%, a $3,000,000 annuity might generate about
$240,000 per year, or roughly $20,000 per month, for lifetime income.
Actual quotes vary by carrier, product type, and options.
How does the payout change at ages 65 and 70?
At age 65, an illustrative payout rate near 8.2% could pay about $246,000 per year,
while age 70 with a rate near 8.5% might pay around $255,000 per year, assuming
similar contract features. Older start ages generally receive higher payout percentages.
Are these $3 million annuity payouts guaranteed for life?
Lifetime annuity options are designed to pay as long as the covered life or lives continue, backed by the claims-paying
ability of the issuing insurer. The specific guarantees depend on the contract you choose and whether you elect
single-life or joint-life coverage.
How does single-life vs. joint-life coverage affect income?
A single-life annuity typically provides the highest income for one person. A
joint-life structure covers two people and continues income for a surviving spouse or partner, so
the initial payout is lower to reflect the longer expected payment period and survivor benefits you select.
Can I annuitize only part of my $3 million instead of all of it?
Yes. Many people use only a portion of their $3,000,000—such as $1 million or $1.5 million—to fund guaranteed
income, and keep the remainder in more flexible investments. This approach can create a strong income floor while
preserving liquidity and growth potential in other accounts.
What types of annuities can I use with a $3 million premium?
Common choices include single premium immediate annuities (SPIAs), deferred income annuities (DIAs), and fixed
indexed annuities with income riders. Each handles liquidity, growth potential, fees, and beneficiary protections
differently, and high-balance plans often combine more than one type for diversification.
How do riders and extra guarantees affect the payout amount?
Features such as period-certain guarantees, cash-refund provisions, enhanced death benefits, or inflation
adjustments provide additional protection but typically reduce the initial monthly income. The more guarantees you
add to a $3 million annuity, the lower the starting payout compared with a basic lifetime-only option.
How are payouts from a $3 million annuity taxed?
If funded with qualified assets (like an IRA or 401(k) rollover), payments are generally taxed as ordinary income.
When funded with non-qualified money, each payment usually contains a mix of taxable gain and non-taxable return
of principal, often determined by an exclusion ratio. A tax professional can explain how these rules apply to you.
Can a $3 million annuity strategy help with RMDs and Social Security timing?
Yes. Coordinating a $3,000,000 annuity with required minimum distributions and Social Security can help create a
stable income base and may allow you to delay benefits when appropriate. The goal is to cover essential expenses
with guarantees, then manage taxes and remaining assets more strategically over time.
How do I see personalized $3 million annuity quotes across carriers?
Personalized quotes start with your age or ages, state of residence, qualified vs. non-qualified funds, desired
income start date, and single vs. joint-life preferences. An independent brokerage can then compare $3 million
annuity designs across multiple insurers and provide compliant illustrations in plain language.
About the Author:
Jason Stolz, CLTC, CRPC, is a senior insurance and retirement professional with more than two decades of real-world experience helping individuals, families, and business owners protect their income, assets, and long-term financial stability. As a long-time partner of the nationally licensed independent agency Diversified Insurance Brokers, Jason provides trusted guidance across multiple specialties—including fixed and indexed annuities, long-term care planning, personal and business disability insurance, life insurance solutions, and short-term health coverage. Diversified Insurance Brokers maintains active contracts with over 100 highly rated insurance carriers, ensuring clients have access to a broad and competitive marketplace.
His practical, education-first approach has earned recognition in publications such as VoyageATL, highlighting his commitment to financial clarity and client-focused planning. Drawing on deep product knowledge and years of hands-on field experience, Jason helps clients evaluate carriers, compare strategies, and build retirement and protection plans that are both secure and cost-efficient.
