How much does a $1 million annuity actually pay?

The short answer

A $1 million annuity can pay anywhere from a modest monthly figure to roughly double that, from the same million dollars, depending on decisions you control and conditions you don't. The spread between the best and worst version of the same purchase is large enough that the shopping matters more than the product.

Four things move the number more than anything else: your age when payments start, whether it covers one life or two, whether payments rise with inflation, and the interest rate environment on the day you buy. Everything else is detail.

Rather than quote a figure that will be wrong by the time you read it, this page explains how each lever works, so you can read any quote you're given and know whether it's competitive.

The four levers, in order of impact

1. Age at the first payment

   This is the biggest single factor. An income annuity is priced against life expectancy: the later you start, the fewer payments the insurer expects to make, and the larger each one is. Starting at 70 rather than 65 raises the monthly figure substantially — not because you earned more, but because the same money is spread over fewer expected years.

   The same logic makes deferral powerful. Buying at 60 but not drawing until 70 combines a decade of growth with a shorter payout window, and produces a far higher monthly figure than starting immediately.

2. One life or two

   A joint-and-survivor annuity keeps paying while either spouse is alive. Two lives means a longer expected payout period, so the monthly amount is meaningfully lower than a single-life contract on the same million.

   That reduction isn't a fee — it's buying a second guarantee. But couples are often quoted single-life figures first because they look better, so check which one you're being shown.

3. Level payments or inflation-adjusted

   A level payment never changes. That looks fine at 65 and considerably less fine at 85, because two or three decades of even moderate inflation erodes what it buys. An inflation-adjusted contract starts noticeably lower and rises over time.

   Most people take the level payment because the opening number is bigger. Whether that's right depends on how long you expect to live and what else in your plan is inflation-linked — Social Security already is, which is part of why level annuity payments are more defensible than they first appear.

4. Interest rates on the purchase date

   Income annuity pricing tracks long-term interest rates closely. The same person, the same million, the same product can produce materially different income depending on when the contract is issued. This is the one lever you don't control, and the reason quotes expire.

   It's also an argument against putting the whole million in on one day. Splitting the purchase across several dates spreads the rate risk in the same way that investing on a schedule does.

What a current quote looks like

We deliberately don't publish a static quote table here. Payout quotes move with interest rates and are specific to your age, state, and carrier — a printed figure would be wrong within weeks and misleading immediately. When you get real quotes, ask each carrier for the same four variants so they're comparable: single life and joint, level and inflation-adjusted, at your actual start age.

What you give up

The monthly figure is only half the trade. A lifetime income annuity typically means handing over access to the principal permanently. That million stops being an asset you can draw on, borrow against, or leave to your children, and becomes a stream of payments instead.

Riders can soften that — a period-certain guarantee pays a minimum number of years regardless, and a cash-refund option returns any unpaid balance to your heirs. Both reduce the monthly payment. There is no version where you keep the liquidity and the higher income.

The other side: this is the only product that removes longevity risk entirely. Drawing 4% a year from an invested million can run out if you live to 100 or hit a bad decade early. A lifetime annuity cannot. Whether that's worth the liquidity is a question about your other assets and your tolerance for uncertainty, not a question with a universal answer.

The comparison people skip

Before committing a million to an annuity, price it against simply holding the money invested and withdrawing from it. The annuity wins on certainty and on the tail risk of living a very long time. A portfolio wins on flexibility, on what's left for heirs, and usually on total return if you die earlier than average.

A common middle path is annuitising only enough to cover essential fixed costs — housing, food, insurance, utilities — and leaving the rest invested. That floors your baseline without surrendering the whole balance, and it's a far easier decision to live with than an all-or-nothing one.

Worth reading next: Annuity vs Mutual Fund · AM Best Ratings Explained · Annuity vs Roth IRA

Before you commit anything like a million

• Get quotes from at least three carriers — the spread on identical terms is routinely wide
• Check the issuer's financial strength rating; a lifetime guarantee is a multi-decade bet on one company
• Ask for the single-life and joint figures if you're married, not whichever looks better
• Ask what the commission is. It's paid from the same million, whether or not it's itemised
• Consider splitting the purchase across dates and carriers rather than one contract on one day
• Confirm the state guaranty association limit where you live — it is usually well below $1 million

That last point deserves emphasis: guaranty association coverage varies by state and is generally far below a million dollars. Splitting a large purchase across multiple insurers is often the only way to stay inside those limits.