How much income does an annuity pay? It depends on a handful of variables that change the payout—sometimes dramatically: your age, the amount you deposit, when you want income to start, the type of annuity you choose, and whether you’re building income for one life or two. This page breaks down those moving parts in plain English and lets you model realistic income ranges using our embedded Lifetime Income Calculator.

At Diversified Insurance Brokers, we compare income options across a wide range of carriers because annuity payout assumptions change over time. Two contracts with the same premium can produce very different lifetime income depending on carrier pricing, interest-rate environments, and the specific payout features you select. If you want to start with the bigger picture first, begin here: Current Annuity Rates.

What Determines How Much Income an Annuity Pays?

Annuity income is not one-size-fits-all. The payout is built from a combination of timing, guarantees, and optional features that change the payment level. Here are the biggest drivers:

• Premium amount: More premium generally means more income. However, the payout ratio can differ by carrier and product style.
• Age when income starts: Starting later often increases the monthly payout because the carrier expects to make payments for fewer years.
• Start date (now vs. later): Immediate income typically pays more today, while deferring income can increase future payouts depending on the strategy.
• Product type: A SPIA behaves differently than a fixed indexed annuity with a lifetime income rider.
• Payout options: Single life vs. joint life, period certain, and refund features all affect the monthly amount.
• Carrier pricing: Payout rates and rider terms vary widely. Comparing carriers is the fastest way to improve results.

It also helps to separate two concepts that people often blend together:

• Income annuity payouts (like a SPIA/DIA) where you exchange premium for a defined stream of income.
• Lifetime income rider withdrawals where income is based on a “benefit base” (not necessarily the account value) and paid as a guaranteed withdrawal.

If you want a quick reference on “income for life” mechanics, this page is a strong companion: Do Annuities Pay an Income for Life?.

Different Annuity Types Pay Income in Different Ways

Immediate Income Annuity (SPIA)

A SPIA is designed for retirees who want income to begin right away—often within 30 days. It typically produces the most predictable paycheck because it is built specifically for immediate income. The tradeoff is that it is less flexible once started, so payout options matter (single vs. joint, period certain, refund, etc.).

Deferred Income Annuity (DIA)

A DIA is similar to a SPIA, but income begins later—often 2 to 15+ years in the future. Deferring can increase the future monthly payment, which some retirees use to create a “raise” later in retirement. DIAs are often used to cover late-life expenses or to strengthen spousal protection.

Fixed Annuity / MYGA (Accumulation First, Income Later)

Fixed annuities and MYGAs focus on guaranteed growth for a set term. Some retirees use them as a “parking place” to grow safely first, then transition to an income strategy later. If your timeline is short and you want predictable growth, compare options here: Best Short-Term MYGA Annuities.

Fixed Indexed Annuity (FIA) with a Lifetime Income Rider

This strategy is often used for people who want downside protection, potential interest crediting, and the ability to turn on guaranteed lifetime withdrawals. The “income amount” is typically based on rider rules and the income base, which can grow during deferral depending on the contract design. To compare this category, start here: Best FIAs with Lifetime Income Riders.

Single Life vs. Joint Life: Why Couples See Different Payouts

If you are planning income for a household, joint-life income can be essential. Joint payouts are typically lower than single-life payouts because the carrier may pay for a longer combined lifetime (as long as either spouse is alive). That tradeoff is often worth it for couples who want income certainty for the surviving spouse.

If you’re building a “personal pension” for a couple, it’s also helpful to understand payout styles like period certain or refund options. (These can change the monthly number, but they may add planning benefits.)

Income Options That Change the Monthly Payment

Your annuity can be designed to emphasize the highest possible income, or to emphasize survivor protection or legacy features. Common choices that affect payout include:

• Life-only: Typically the highest monthly payout, but no refund when the annuitant passes (unless a rider or separate feature applies).
• Life with period certain: Guarantees payments for a minimum number of years (like 10 or 20), even if death occurs early.
• Cash refund: Helps return any unrecovered premium to beneficiaries (usually lowers the monthly payment).
• Joint life: Pays as long as either spouse is alive (monthly payment is usually lower than single life).

If beneficiary planning is a priority, this guide explains what “death benefits” can mean across annuity types: Annuity Beneficiary and Death Benefits.

Use the Lifetime Income Calculator

Run estimates for your age, amount, and income start date. You can test different scenarios (including joint-life) to see how design choices change the monthly payout. If the widget doesn’t appear immediately, give it a moment to load.

💡 Note: The calculator accepts premium inputs up to $2,000,000. If you’re modeling more than $2M, results generally scale in direct proportion (for example, if $2M pays $X, then $4M ≈ 2 × $X). For exact large-case illustrations, request a personalized quote.

Illustrative Income Scenarios (Why the Same Premium Can Pay More or Less)

Below are examples of how payout design changes outcomes. These aren’t “guaranteed numbers” because quotes change, but they show the logic behind why one strategy can pay more than another:

• Immediate income now (SPIA): Best when you want a predictable paycheck right away and you’re prioritizing near-term cash flow.
• Defer income 5–10 years: Often increases future lifetime income because you’re starting later (and may be growing a benefit base or locking a later payout age).
• Joint-life income: Pays less per month than single-life, but covers the household longer by continuing until the second spouse passes.
• Adding refund / period certain: Can reduce the monthly payment, but may improve legacy protection or guaranteed minimum payout years.

Guaranteed Income vs. the 4% Rule

Many retirees compare annuity income to the 4% Rule. The key difference is that the 4% Rule is a planning guideline based on market history, while annuity income can create a contractual “income floor” that doesn’t depend on market returns. A common planning approach is to cover essential expenses with guaranteed income and use investments for discretionary spending and inflation flexibility.

Taxes and Distribution Rules (Quick Basics)

Income taxation depends on how the annuity is funded:

• Non-qualified (after-tax) money: Growth is tax-deferred; withdrawals are typically taxed as gains first until earnings are withdrawn.
• Qualified money (IRA/401k rollovers): Distributions generally follow retirement account tax rules.

If you want to understand how beneficiaries and death benefits work across annuity structures, start here: Annuity Beneficiary and Death Benefits.

Liquidity: What If You Need Access to Money?

Most deferred annuities include a penalty-free withdrawal feature (often up to 10% annually after the first contract year). If your timeline is short and liquidity matters, compare shorter terms here: Best Short-Term MYGA Annuities.

If you’re evaluating an annuity move and want to reduce the friction of surrender costs, some retirees compare bonus structures that can help offset those costs depending on timing and contract details. See: Best Upfront Bonus Annuity.

Related Topics to Explore

• Current Annuity Rates
• What Is the 4% Rule?
• Best Fixed Indexed Annuities with Lifetime Income Riders
• Best Short-Term MYGA Annuities
• Best Upfront Bonus Annuity
• Annuity Beneficiary and Death Benefits