A single premium immediate annuity (SPIA) converts a lump sum into a guaranteed income stream beginning within 30 days of purchase — no accumulation phase. Popular with new retirees converting 401(k) rollovers or inheritances into pension-style paychecks. Choose your payout type below to see how each option affects your monthly income.
SPIA Payout Estimator
3 Payout Types · Free
Payout Type
Pays for a fixed number of years regardless of whether you live or die. Beneficiaries continue receiving payments.
Show Payout As
Monthly Income
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Per payment period
Total Received
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Over full term
Break-Even Age
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To recover principal
Your Premium
Total Received
Break-Even at Age —
Adjust the inputs above to see your break-even analysis.
25%
Chance a 65-year-old lives to age 90 (SSA 2024)
5–8%
Monthly payout increase per year delayed after 60
$3.73T
U.S. annuity industry reserves (ACLI 2025)
2026 Rate Environment
With 10-year Treasury yields elevated vs. 2021–2022 lows, SPIA payout rates in 2026 remain considerably better than recent historical lows. Locking in now can mean $300–$500 more per month on a $200K purchase versus a 2021 purchase at the same age.
Payout Type Comparison: Which Is Right for You?
| Payout Type | Monthly Amount | Heir Protection | Best For |
|---|---|---|---|
| Life Only | Highest (~+15%) | None at death | No dependents; longevity focus |
| Period Certain (20 yr) | Moderate-High | Full term guaranteed | Most retirees — balanced choice |
| Period Certain (30 yr) | Moderate | 30-yr guarantee | Younger retirees (age 60–65) |
| Joint & Survivor (50%) | Moderate-Low | Spouse gets 50% | Married couples, common choice |
| Joint & Survivor (100%) | Lowest | Spouse gets full payment | Large income gap between spouses |
Life Expectancy Reference Table (SSA 2024)
Understanding longevity is essential for evaluating an immediate annuity. The longer you live past break-even, the more valuable the annuity becomes.
| Current Age | Median Life Expectancy | 25% Chance of Living To | 10% Chance of Living To |
|---|---|---|---|
| 60 | 85 | 91 | 95 |
| 62 | 85 | 91 | 95 |
| 65 | 85 | 90 | 94 |
| 67 | 85 | 90 | 94 |
| 70 | 86 | 90 | 93 |
| 75 | 87 | 90 | 93 |
Source: SSA 2024 period life tables. Joint life expectancy for married couples is considerably longer — if either spouse has a 25% chance of living to 90, the couple together has a ~44% chance at least one will reach 90.
Estimated Monthly Income by Lump Sum (5.5% Rate, 20 Years)
| Lump Sum | Monthly Income | Annual Income | Total (20 yrs) | Break-Even |
|---|---|---|---|---|
| $100,000 | $687 | $8,244 | $164,880 | 12.1 yrs |
| $200,000 | $1,374 | $16,488 | $329,760 | 12.1 yrs |
| $300,000 | $2,061 | $24,732 | $494,640 | 12.1 yrs |
| $500,000 | $3,435 | $41,220 | $824,400 | 12.1 yrs |
| $750,000 | $5,153 | $61,836 | $1,236,720 | 12.1 yrs |
| $1,000,000 | $6,870 | $82,440 | $1,648,800 | 12.1 yrs |
*Estimates only. Actual insurer quotes vary by age, gender, state, and current interest rates.
Frequently Asked Questions
How much does a $500,000 immediate annuity pay per month?
At a 5.5% payout rate over 20 years, a $500,000 SPIA pays approximately $3,435/month ($41,220/year). For a 70-year-old choosing a life-only payout, the amount would be significantly higher than for a 60-year-old, because the insurer expects fewer total payments. Always get multiple quotes from A-rated insurers — a 10% difference in quotes is common across companies.
Can I get my money back from an immediate annuity?
Generally no — a SPIA is irrevocable. You exchange a lump sum for guaranteed income, forfeiting control of the principal. Some contracts offer a cash refund rider (guarantees your beneficiary receives at least your original premium if you die early) or a commutation option, but both reduce the monthly payment. This illiquidity is why planners recommend annuitizing only a portion — typically 25–50% — of retirement assets.
When is the best time to buy an immediate annuity?
The optimal time is when you need income to start immediately and interest rates are relatively high. Every year you delay after 60 generally increases the payout by 5–8% (shorter expected payout period). However, locking up capital too early means less portfolio flexibility. Most financial planners suggest annuitizing between ages 65 and 75. In 2026's elevated rate environment, current payout rates are meaningfully better than 2020–2022 lows.
Is an immediate annuity the same as a pension?
Functionally yes — both convert a lump sum or service history into guaranteed monthly income for life. The difference is structure: a pension is a defined-benefit plan funded by your employer, while a SPIA is a product you buy from an insurance company. Many retirees without a traditional pension use SPIAs to create a "personal pension" from a 401(k) lump-sum rollover. See our main annuity calculator to model both options.
How is an immediate annuity taxed?
For qualified SPIAs (purchased with pre-tax 401k/IRA funds), all payments are fully taxable as ordinary income. For non-qualified SPIAs (after-tax money), only the earnings portion of each payment is taxable — the rest is a tax-free return of your cost basis (called the exclusion ratio). The IRS Publication 939 covers annuity taxation in detail. Social Security taxation thresholds may also be affected by annuity income, so consult a tax advisor.
What happens if the insurance company goes bankrupt?
Each state has a guaranty association that protects annuity owners if an insurer becomes insolvent, typically up to $250,000 in coverage (varies by state). For large SPIA purchases, consider splitting the premium between two A-rated insurers to stay within guaranty limits. Always verify the insurer's financial strength rating (A.M. Best A or better) before purchasing.