If you're nearing retirement and thinking about turning your savings into guaranteed monthly income, a $250,000 annuity might seem like a smart move.
An annuity is a financial contract you buy from an insurance company. In exchange for a lump-sum payment, they agree to send you regular monthly income—either starting now or later. Some annuities offer fixed payouts. Others depend on market performance.
But the big question is: how much cash can you actually expect each month if you put $250,000 into one?
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How Much Can a $250,000 Annuity Pay Per Month?
According to RetireGuide, for a 65-year-old buying a single-life immediate annuity today:
- Men can expect around $1,600 per month
- Women, who statistically live longer, may receive about $1,530 per month
Add a joint life payout option for a spouse, and monthly income drops slightly to account for the longer combined lifespan.
With a fixed annuity, which guarantees steady monthly payments, the range is typically $1,300 to $1,600—depending on current interest rates at the time of purchase. These payments don't change, making them a popular option for retirees on a strict monthly budget.
A variable annuity, which ties returns to market performance, introduces more risk and reward. Historical averages suggest monthly payments may land between $1,000 and $1,300, but there's no guaranteed floor—and payouts can fluctuate with investment results.
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Indexed annuities fall in the middle. These link returns to an index like the S&P 500, offering some upside potential with protection against major losses. With this structure, a $250,000 investment may yield $1,100 to $1,400 per month, depending on the cap and participation rate built into the contract.
Deferred Annuities: Bigger Payouts Later
Deferring payments allows your investment to grow before income begins. If a 65-year-old defers income for 10 years, monthly payments could jump to $1,500 to $1,800, depending on the annuity terms and type.
Pros and Cons of Buying an Annuity
Pros:
- Guaranteed monthly income for life, with the right contract
- Protection from outliving your savings
- Optional inflation riders or spousal benefits
- Useful for retirees without pensions
Cons:
- Limited access to principal once payments begin
- Lower returns compared to stock market investments
- Fees and surrender charges can reduce value
- Inflation risk, unless you pay for protection
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Final Word: Know Your Goals Before You Commit
For some people, an annuity is a smart way to turn retirement savings into reliable income. For others, it might feel too restrictive. Before locking in, take a good look at your timeline, budget, and long-term needs. Talk to a licensed advisor who can break down your options—without the sales pitch.
An annuity can be a solid piece of your retirement puzzle. Just make sure it fits your picture.
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