The amount a $10 million annuity would pay depends on when you invest, 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 starting in 2025.

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 is a financial product designed to provide a steady income stream, typically used as a retirement planning tool. Offered by insurance companies, annuities allow individuals to invest a lump sum or make a series of payments in exchange for periodic payouts in the future. These payouts can be structured to last for a specific number of years or the lifetime of the annuitant, providing a sense of financial security during retirement.

There are several types of annuities, each catering to different financial goals and risk tolerances. Fixed annuities offer a guaranteed payout, making them a popular choice for those seeking stability. Variable annuities, on the other hand, allow the annuitant to invest in a portfolio of securities, with payouts fluctuating based on the performance of these investments. Indexed annuities combine features of both fixed and variable annuities, with returns linked to a specific market index, offering potential for higher earnings while still providing some level of protection against market downturns.

How Much Would a $10 Million Annuity Pay?

The amount that a $10 million annuity will pay depends on the details of your contract. The payout depends on several factors, including the type of annuity, payout period, interest rate and the age and gender of the annuitant.

For example, a $10 million 30-year annuity with a 5% annual growth rate would produce a monthly income of $53,459. However, 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 Annuity Payments

The amount you receive from an annuity can vary based on several factors. Understanding these factors can help you make informed decisions about your financial future and ensure that your annuity aligns with your retirement goals. The exact amount that you can expect from a $10,000,000 annuity will vary based on these 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.
• Initial investment: The initial investment amount and the duration of the annuity contract are crucial determinants of your annuity payments. Generally, the more you invest, the higher your payments will be.
• 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 type: The 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.

By understanding these elements, you can make informed decisions that align with your financial goals and retirement plans.

Advantages and Disadvantages of an Annuity

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 altogether.

Should You Get an Annuity?

Whether you should get an annuity depends on your financial goals, risk tolerance, and income needs. Annuities can provide a reliable stream of income, making them a good choice for retirees who want financial security and protection against outliving their savings. They are particularly beneficial for those who do not have a pension and want to ensure a steady cash flow in retirement. Additionally, annuities offer tax-deferred growth, meaning you won’t pay taxes on earnings until you start receiving payments.

Here are some things to keep in mind that might impact your decision:

• Retirement income: An annuity is a source of reliable income. 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 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 these rent payments.

However, annuities are not ideal for everyone. They often come with high fees, surrender charges, and limited liquidity, meaning you may have difficulty accessing your money if needed. Fixed annuities provide stability but may have lower returns than other investments, while variable annuities can offer higher growth potential but come with market risk. Indexed annuities strike a balance, offering some protection while still being tied to market performance.

Here are three reasons why another investment vehicle might be a better fit:

• High fees: Unfortunately, most annuities involve high fees. 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

When you sign up for an annuity, the payment amount your $10 million investment will get you varies based on the situation. As always, before moving forward with an annuity contract, read the fine print and discuss your options with a financial advisor, who can help tailor the annuity to best suit your personal circumstances and maximize its benefits.

Tips for Retirement Savers

• A financial advisor helps you create a financial plan for your retirement savings needs and goals. 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.
• 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.

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