Many investment options are available as you build your retirement nest egg. An annuity provides guaranteed retirement income and can be a key part of a financial plan. However, annuity payments vary based on several factors, including whether they start immediately or are deferred. As of March 2025, a $250,000 single-life immediate annuity could pay more than $1,500 per month. Here’s a breakdown of annuities, how they work and how much a $250,000 annuity could pay.
Before purchasing an annuity, consult a financial advisor to explore the best options for your retirement.
What Is an Annuity?
An annuity is a contract between an investor and an insurance company. Terms vary, but the insurance company generally accepts an investment from you. You can either pay a lump sum upfront or make payments over time.
In exchange, the insurance company provides regular payments for a set period. Although annuities are typically used for retirement, they can also provide stable income for those seeking protection from market fluctuations.
3 Factors That Impact Payments
Several factors affect how much a $250,000 annuity will pay. Three key factors include:
- Interest rate: Your contract specifies an interest rate. A higher rate results in larger payments.
- Start date: An annuity can provide immediate income or be deferred for higher future payments. Waiting increases the payout.
- Type of annuity: Annuities can be fixed or variable. Fixed annuities guarantee returns, while variable annuities do not.
How Much Does a $250k Annuity Pay?
The table below gives examples of what a $250,000 immediate, lifetime, fixed-income annuity would pay, for annuitants of several ages. The estimated payments, which were generated using the Schwab Income Annuity Estimator, are lower for women because women have a longer life expectancy than men.
Estimated Monthly Payments of a $250,000 Annuity
| Age | Single Life Only | Single Life + 10-Year Certain | Single Life + 20-Year Certain | Single Life + Cash Refund |
|---|---|---|---|---|
| 85 | $3,376 (male) $3,054 (female) | $2,400 (male) $2,293 (female) | $1,585 (male) $1,585 (female) | $2,565 (male) $2,315 (female) |
| 80 | $2,586 (male) $2,379 (female) | $2,220 (male) $2,088 (female) | $1,583 (male) $1,575 (female) | $2,205 (male) $2,035 (female) |
| 75 | $2,093 (male) $1,954 (female) | $1,980 (male) $1,858 (female) | $1,565 (male) $1,545 (female) | $1,908 (male) $1,793 (female) |
| 70 | $1,774 (male) $1,685 (female) | $1,755 (male) $1,658 (female) | $1,518 (male) $1,485 (female) | $1,685 (male) $1,605 (female) |
| 65 | $1,572 (male) $1,516 (female) | $1,578 (male) $1,505 (female) | $1,440 (male) $1,425 (female) | $1,523 (male) $1,463 (female) |
Given that terms of an annuity vary widely how much a $250,000 annuity pays will vary. Review your contract for exact monthly payment details.
Should You Get an Annuity?
An annuity may not suit everyone, but it can provide reliable income in retirement or before.
Two key reasons to consider an annuity are retirement income and longevity. Fixed annuities provide financial security, and those with a long life expectancy may benefit the most
Here are three situations when another investment vehicle might be a better fit:
- You don’t have the savings to purchase an annuity: An annuity requires a significant upfront investment. Without the necessary premium, it may not be an option.
- You have other savings goals: If you have other financial priorities like debt repayment or emergency savings, an annuity may not be the best choice.
- You have a short life expectancy: If you expect a shorter lifespan, an annuity may not benefit your dependents.
Bottom Line
An annuity can enhance retirement income but isn’t right for everyone. Depending on your financial circumstances you may want to also consider other options. If you’re unsure about an annuity, consult a financial advisor. He or she can help you evaluate your entire financial picture to see where an annuity might fit into the picture.
Retirement Tips
- A financial advisor can help you decide if an annuity is a good fit for your retirement plans. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- A key part of retirement planning is knowing how much you should save. Use SmartAsset’s free retirement calculator to see how much you should be saving.
- An annuity is just one part of a retirement plan. Other streams of income might include Social Security payments. See how much you can expect to receive with our calculator.
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