How much will a $200,000 annuity pay me per month?

How much does a $200,000 annuity pay?

How much does a $200,000 annuity pay?

An annuity can be an attractive option to build up your pension. Adding a guaranteed retirement income to your retirement can give you financial stability. But the exact amount you receive each month from an annuity varies. Let’s see how much a $200,000 annuity will pay you each month. A financial advisor can help you create a financial plan for your retirement needs and goals.

What is an annuity?

An annuity is a financial contract between an investor and an insurance company that generally stipulates a regular monthly payout in exchange for an investment. In some cases, you provide all the money up front. In other cases, you would make the payments to your insurance company over a long period of time.

After you provide the money, your insurance company will make regular payments at a predetermined amount for a specified period of time. Most people who buy annuities use the money as an additional income stream for retirement. But retirement is not a requirement. You can buy an annuity if you want a guaranteed source of income for any situation.

Factors that affect payments

The exact amount you can expect to receive from a $200,000 annuity depends on three factors:

  • The interest rate: When you sign up for an annuity, you see an interest rate that is stipulated in the contract. You want to lock in a high interest rate for higher payments.

  • When you want the payments: You can choose between an immediate annuity or a deferred annuity. An immediate annuity starts immediately. But usually you will see a higher monthly payment with a deferred annuity.

  • Type of annuity: The monthly payment you receive from an annuity may or may not fluctuate. When you sign up for a fixed annuity, you lock in guaranteed monthly payments. If you sign up for a variable annuity, you won’t find guaranteed monthly payments. Variable annuities are usually tied to market factors. So if interest rates rise, your monthly payout may increase.

The table below provides examples of what an instant, lifetime, fixed-income annuity of $200,000 would pay for annuitants of different ages. The numbers come from a Charles Schwab calculator.

Estimated Monthly Payments of a $200,000 Annuity Age Single Life Only Single Life + 10-Year Certain Single Life + 20-Year Certain Single Life + Cash Refund 85 $2,586 $1,809 $1,203 $1,836 80 $1,945 $1,632 $1,197 $1,542 75 $1,551 $1,435 $1,173 $1,335 70 $1,294 $1,254 $1,118 $1,179 65 $1,132 $1,116 $1,045 $1,067

The unique details of your annuity determine the monthly payment. Take the time to review the information in your annuity contract to make sure your payment is the way you want it to be.

Should you get an annuity?

How much does a $200,000 a month annuity pay?

How much does a $200,000 a month annuity pay?

Depending on your financial situation, an annuity can be a reliable income stream for your retirement. One of the factors to consider is the need for reliable income. A fixed annuity provides a reliable stream of income whether or not you are retired. A second factor to consider is your expected lifespan. If you have a long life expectancy, an annuity can help support you for that longer period of time. A third factor has to do with how involved you want to be in managing your finances. With an annuity, you receive a monthly payment. You don’t need to monitor investments, rebalance a portfolio or manage tenants to receive this income.

Now let’s look at three reasons why a different investment vehicle might be a better fit:

  • High cost: Unfortunately, most annuities have high costs. If you want to avoid costs, choosing another investment is the way to go.

  • No access to the client: Once you sign up for an annuity, you can’t withdraw your money. So if there is a major expense, this client will be inaccessible.

  • Other savings priorities: If you want to save for other purchases, the cost of an annuity may be too high.

It boils down

How much does a $200,000 a month annuity pay?

How much does a $200,000 a month annuity pay?

An annuity can be a convenient investment option that adds value to your retirement. But it’s not the right choice for everyone. Depending on your financial situation, you may also want to consider other options. If you can’t decide whether or not an annuity is right for you, it’s time to talk to a financial advisor. He or she can help you evaluate your entire financial picture to see where an annuity fits into the picture.

Retirement tips

  • Work with a financial advisor to help you map out a solid retirement plan. SmartAsset’s free tool pairs you with up to three financial advisors serving your area, and you can interview your advisor matches for free to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

  • Saving for your retirement starts with understanding how much you need to save. SmartAsset’s free retirement calculator can help you see how much you should be saving.

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