How Much Does a $4 Million Annuity Pay
Jason Stolz CLTC, CRPC
How much does a $4 million annuity pay? For retirees and high-net-worth investors, the goal is converting assets into secure, lifetime income that complements Social Security and other retirement plans. At Diversified Insurance Brokers, we compare more than 100 top-rated carriers so you can see exactly how much guaranteed income your premium can generate—whether you prefer immediate, deferred, or fixed indexed options with lifetime riders.
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What a $4,000,000 Annuity Can Pay (Examples)
Here’s what guaranteed lifetime income typically looks like for different start ages and payout structures:
- Age 60 – 8.0% → $320,000/yr (~$26,667/mo)
- Age 65 – 8.2% → $328,000/yr (~$27,333/mo)
- Age 70 – 8.5% → $340,000/yr (~$28,333/mo)
Figures are approximate and vary by carrier, rider, and income start date. Joint-life options may slightly reduce payouts.
Why Create a “Personal Pension”
- Guaranteed income: Payments continue for life regardless of markets.
- Principal protection: Fixed and indexed annuities prevent market losses.
- Predictable budgeting: Know your monthly baseline before taking portfolio risk.
- Spousal continuity: Joint options cover both lifetimes.
How $4M Payouts Are Calculated
- Age & deferral: The longer the deferral, the higher the payout.
- Product type: Immediate, deferred, or indexed annuities have different formulas.
- Riders: Lifetime income, inflation, or period-certain features alter the rate.
- Single vs. joint: Joint-life lowers income slightly to extend coverage over two lives.
Integrating $4M Annuities into a Larger Plan
A $4 million annuity often serves as a pension alternative, delivering reliable income while preserving flexibility in other assets. Many clients use annuities alongside non-qualified funds, trusts, and charitable strategies like QCDs to manage taxes efficiently.
Who This Strategy Fits Best
- Affluent retirees seeking predictable, low-risk lifetime income.
- Couples coordinating guaranteed income with Social Security or pensions.
- Executives using annuities to hedge sequence-of-returns risk.
- Investors wanting guaranteed yield with estate-friendly options.
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FAQs: How Much Does a $4 Million Annuity Pay?
How much does a $4 million annuity pay monthly?
Depending on age and product design, monthly income usually ranges between $26,000 and $28,000 for lifetime payouts starting between ages 60–70.
Can I buy a $4 million annuity with IRA or 401(k) funds?
Yes. Qualified funds can be transferred tax-deferred into an annuity to generate guaranteed income and satisfy RMDs.
Is the income guaranteed for life?
Yes. Fixed and fixed-indexed annuities with lifetime income riders guarantee payments for life, even if the account balance runs out.
Can I add inflation protection?
Many carriers offer optional cost-of-living or inflation-adjusted payout riders to help maintain purchasing power over time.
What if I pass away early?
Refund and period-certain options can ensure beneficiaries receive remaining principal or guaranteed income for a set term.
Can I split $4M among different carriers?
Yes. Large cases are often laddered across carriers to diversify guarantees, features, and state guaranty limits.
Are annuity payments taxable?
Qualified annuities are taxed as ordinary income. Non-qualified annuities only tax the earnings portion through the exclusion ratio.
Can I access funds after income starts?
Some income riders allow limited withdrawals or enhanced access for care needs, but maximizing lifetime income reduces liquidity.
