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How Much Would a $10 Million Annuity Pay?


The amount a $10 million annuity would pay depends on when you make the investment, the returns attached to your annuity and the details of the contract. With that, it’s challenging to nail down a specific amount. However, we can provide some ballpark estimates. For example, a 20-year annuity with a 5% annual growth rate would produce a monthly income of $65,721.

A financial advisor can help you figure out whether an annuity is a good fit for your retirement plan. 

What Is An Annuity?

An annuity represents a contract between you and an insurance company. As the saver, you’ll agree to pay for an annuity via a lump sum or monthly payments. After you hold up your end of the bargain, the insurance company makes payments to you on the agreed-upon schedule.

How Much Would a $10 Million Annuity Pay?

The amount that a $10 million annuity will pay depends on the details of your contract.

For example, a $10 million 30-year annuity with a 5% annual growth rate would produce a monthly income of $53,459. But a $10 million annuity with a 10-year term and the same annual growth rate could produce a monthly payment of $105,625.42 per month.

If you want an estimate for the details of your unique situation, consider using this free fixed-income annuity calculator.

For reference, the table below breaks down estimated payments for a $10 million immediate annuity:

Estimated Payments From a $10 Million Immediate Annuity


Factors That Affect Payments

The exact amount that you can expect from a $10,000,000 annuity will vary based on these three factors:

  • Interest rate: The interest rate defined in the contract will impact how much you will earn on a return. You’ll want to lock in a high interest rate for higher payments.
  • Payment allocations: You can choose between an immediate annuity or a deferred annuity. An immediate annuity kicks in right away, but you’ll typically see a higher monthly payment with a deferred annuity.
  • Annuity typeThe monthly payment you get from an annuity may or may not fluctuate. If you sign up for a fixed annuity, you’ll 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 might go up.

Advantages and Disadvantages of an Annuity

SmartAsset: How Much Would a $10 Million Annuity Pay?

As with all financial products, there are some pros and cons to consider before purchasing an annuity. Here are five benefits to consider:

  • Stress-free payments: The insurance company handles the back-end details of managing your money. With that, you’ll receive a stress-free income on a regular schedule.
  • Tax-deferred growth: When you make contributions to an annuity, those funds can grow in a tax-deferred manner. Although you’ll owe taxes on the funds when you receive payments from your annuity, the funds have a chance to grow tax-free.
  • Possibility of guaranteed returns: Fixed annuities provide the rare opportunity for guaranteed returns. If you are interested in guaranteed retirement income, explore these option options.
  • Joint annuities available: If planning for retirement with a spouse, you can choose a joint annuity option. Although this is often less lucrative, it provides peace of mind for both of your futures.
  • Death benefit options: Some annuities offer a death benefit option. However, you will likely find more cost-effective solutions for a death benefit through life insurance.

Here are three potential disadvantages to keep in mind:

  • Costs: The fees involved in an annuity can get expensive quickly. Make sure to read the fine print before committing to an annuity. If you are concerned about the fees, talk over your options with a financial advisor.
  • Risk of not keeping up with the market: When you opt for a guaranteed return, this is likely a lower return than you could get with the market. Depending on the market, you could earn better returns by sticking with the market. However, market returns are never guaranteed.
  • Iron-clad contracts: If you change your mind about an annuity, there’s often little you can do to get out of the deal. Although you might be able to make changes to the annuity, most contracts won’t let you withdraw your funds all together.

Should You Get an Annuity?

Depending on your financial circumstances, an annuity could be a reliable stream of income for your retirement. Here are three factors to consider in favor:

  • Retirement income. An annuity is a source of reliable income. And a fixed annuity, for instance, provides a reliable income stream whether or not you are retired.
  • Longevity. If you have a long life expectancy, then an annuity can help you support yourself for that extended period of time.
  • Hands-off management. An annuity sends a monthly payment to you every month. You won’t have to monitor investments or rebalance a portfolio to receive this rent payments.

Now, let’s consider three reasons when another investment vehicle might be a better fit:

  • High fees: Unfortunately, most annuities have high fees involved. If you want to avoid fees, choosing another investment is the way to go.
  • No access to the principal: Once you sign up for an annuity, you won’t be able to pull out your funds. So, if a major expense comes up, this principal is inaccessible.
  • Other savings priorities: If you want to save for other purchases, the costs of an annuity may be too much to commit to.

Bottom Line

SmartAsset: How Much Would a $10 Million Annuity Pay?

When you sign up for an annuity, the payment amount your $10 million investment will get you varies based on the situation. Before moving forward with an annuity contract, read the fine print and discuss your options with a financial advisor.

Tips for Retirement Savers

  • A financial advisor help you create a financial plan for your retirement savings needs and goals. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost 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.
  • Annuities have their upsides, most importantly the certainty they can offer for retirement savers. But critics suggest that they can cost you far more than if you had spent the same amount of time invested in a simple index fund. This guide breaks down the pros and cons.

Photo credit: ©, © – Julia Amaral, © Trade