How much does a $1 million annuity pay per month?
A $1M immediate annuity for a 65-year-old pays $6,690–$6,980/month for life. Here's how that breaks down by age, sex, and joint life options.
A $1 million immediate annuity bought at age 65 pays about $6,690–$6,980 per month for life at illustrative top-of-market October 2026 levels — roughly $80,000 to $84,000 a year — for a single person. The difference between those two figures is sex — a woman’s longer life expectancy buys a smaller check — and the figure rises if you start later. But the real answer depends on the type of annuity, your age, your sex, and which payout options you add. This guide breaks down the numbers by age, shows what each lever costs you, and explains why annuitizing the entire $1M is usually the wrong move.
How a $1 million annuity actually pays out
The payout most people picture comes from a single-premium immediate annuity (SPIA): you hand an insurer $1,000,000, and it sends you a fixed check every month for the rest of your life starting right away. The insurer pools your money with many other buyers and prices the payout off your life expectancy and current interest rates.
SPIA income scales linearly with premium, so $1M simply pays 10× the per-$100,000 figure. That's why a $100k quote of ~$700/month becomes ~$7,000/month at $1M. The monthly amount blends a return of your own principal with interest and a "mortality credit" — the subsidy passed to people who live longer from the pool of those who don't.
How much $1 million pays by start age
The single biggest lever is the age you turn on income. Start later and the insurer expects to pay you for fewer years, so each check is bigger.
Illustrative single-life payout by starting age — representative levels for A.M. Best A− and above carriers, not a survey or quote. Payout levels as of October 2026. A female buyer's check runs about 4.2% lower at 65 and 7.1% lower at 80, reflecting longer life expectancy. Actual quotes vary by carrier, state, sex and payout option.
| Age you start | Approx. monthly (illustrative) | Approx. annual |
|---|---|---|
| 60 | ~$6,550 | ~$79,000 |
| 65 | ~$6,980 | ~$84,000 |
| 70 | ~$7,690 | ~$92,000 |
| 75 | ~$9,000 | ~$108,000 |
These are illustrative single-life immediate-annuity figures for a man; real quotes vary by carrier, state, sex, and prevailing rates. Women are typically quoted slightly less than men at the same age because they live longer on average. Joint-life, cash-refund, or period-certain options reduce these numbers, and a cost-of-living rider lowers the starting figure in exchange for raises later.
What each payout option costs you
Every layer of protection you bolt on shifts risk to the insurer, and the insurer charges for it by lowering your check. The "life-only" option pays the most because it stops the day you die — nothing for a spouse, nothing for heirs.
- Joint & survivor: keeps paying while either spouse lives. Expect roughly 15–22% less than single life, depending on the survivor percentage — about 15% for a 50% survivor benefit and about 22% for 100%.
- Period certain: guarantees payments for a set window (say 10 or 20 years) even if you die early, so heirs aren't shut out. A modest reduction versus life-only.
- Cash or installment refund: ensures your beneficiaries receive at least the unpaid balance of your premium. Another small haircut to the monthly figure.
- Cost-of-living (COLA) rider: raises the payment each year, but starts you ~20–30% lower.
A worked example: the COLA trade-off in dollars
Say you're 70 and put $1,000,000 into a single-life SPIA. A fixed payout might start at ~$7,690/month, or $92,280 in year one, and stay flat for life. A COLA version with 3% annual increases might start ~27% lower — around $5,610/month, or $67,320 in year one.
The fixed annuity pays more for years. At 3% inflation, the COLA payment grows past it only after roughly a decade: $5,610 growing 3% a year reaches about $7,800/month around year 12 and keeps climbing, while the fixed $7,690 never moves. Over a 25-year retirement the rising stream can deliver more total dollars and far more late-life purchasing power — but you give up income in your most active early years to get there.
The barbell: annuitize part of the $1M, invest the rest
Annuitizing the entire $1M maximizes the guaranteed check but eliminates liquidity, growth, and most of your legacy. Once that money is annuitized, you generally can't get the lump sum back. For most people with $1M, putting it all in one annuity is overkill.
A common approach is a barbell: annuitize only enough to cover essential expenses — an income floor — and keep the rest invested. One way to structure it:
- Annuitize roughly $300,000–$400,000 so guaranteed income plus Social Security covers necessities (housing, food, insurance, utilities) for life.
- Hold 1–2 years of spending in cash as a buffer against market downturns.
- Invest everything else for inflation defense, flexibility, and heirs.
You floor the necessities and keep the upside. The Consumer Financial Protection Bureau's guidance on planning retirement income makes the same core point: cover the bills you can't skip first, then build flexibility around that floor.
Who a $1 million annuity is right for — and who should skip it
An annuity is longevity insurance, not a growth play. Whether it fits depends on your fears and your other resources.
Good fit if you
- Worry most about outliving your money and want a paycheck you can't outlast.
- Lack a pension and want to turn savings into pension-like income.
- Tend to overspend or want to remove the stress of managing a portfolio in your 80s.
- Are in average or good health (the pool prices off average longevity).
Probably skip it — or annuitize less — if you
- Already have ample guaranteed income from a pension and Social Security.
- Prioritize leaving a large inheritance.
- Have a serious health condition that shortens life expectancy (the pool works against you).
- Need full access to the $1M for flexibility or large irregular expenses.
Taxes on a $1 million annuity
How your payments are taxed depends entirely on where the money came from.
- Qualified annuity (funded with IRA or 401(k) dollars that were never taxed): every payment is taxed as ordinary income.
- Non-qualified annuity (funded with after-tax savings): each payment is part tax-free return of principal and part taxable interest, split by an exclusion ratio until your original principal is recovered.
The IRS spells out how annuity income is reported and the exclusion-ratio math in its rules on pension and annuity income (Publication 575). Because a $1M annuity can add tens of thousands in annual income, check how it interacts with your tax bracket and Medicare premiums before you buy.
How to buy: next steps
Getting the most from $1M is largely about disciplined shopping, because two carriers can quote the same buyer meaningfully different checks on the same day.
- Decide how much to annuitize — size the floor to your essential expenses, not the whole balance.
- Pick the structure — single vs. joint life, any period-certain or refund, COLA or fixed.
- Get quotes from several highly rated carriers in the same week, since payouts move with interest rates.
- Confirm your state's guaranty-association limit per insurer — it is a capped backstop, not a substitute for the insurer's strength.
- Coordinate with Social Security timing — delaying benefits is itself an inflation-adjusted annuity; see the official trade-offs at ssa.gov.
