{
  "id": "immediate-annuity",
  "version": "d506f7fbb332",
  "status": "published",
  "name": "Immediate Annuity Calculator",
  "question": "Immediate annuity: what will it pay?",
  "summary": "Estimates the lifetime income a single premium immediate annuity pays, from your age, sex, an interest rate, and an optional guaranteed period, priced with the SSA life table.",
  "category": "finance",
  "subcategory": "retirement",
  "url": "https://www.acalculator.org/finance/immediate-annuity-calculator",
  "markdown": "https://www.acalculator.org/finance/immediate-annuity-calculator.md",
  "kind": "schedule",
  "method": "payout = premium ÷ Σ v^t × S(t) over every payout time t = j ÷ (payouts a year), with v = 1 ÷ (1 + rate) and S(t) = 1 in the guaranteed years, else the chance of being alive at t from the SSA life table.",
  "assumptions": [
    "This is a fair-price estimate: an insurer’s quote also covers its costs and profit and uses its own life tables, so real quotes are usually lower.",
    "Survival comes from the Social Security 2023 period life table; within each year of age, deaths are spread evenly. Nobody lives past 120.",
    "The interest rate is a yearly effective rate, the same for every year; payouts are level, with no cost-of-living increase.",
    "The first payout is one period after you buy, and payouts stop at death after any guaranteed years.",
    "Taxes and fees are not included. This is an estimate for planning, not financial advice."
  ],
  "inputs": {
    "$schema": "https://json-schema.org/draft/2020-12/schema",
    "type": "object",
    "properties": {
      "premium": {
        "title": "Premium",
        "description": "The lump sum you pay the insurer once, at the start.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 1000,
        "maximum": 100000000
      },
      "age": {
        "title": "Age when you buy",
        "description": "Your age in whole years on the day you buy, from 50 to 90.",
        "type": "integer",
        "minimum": 50,
        "maximum": 90
      },
      "sex": {
        "title": "Sex",
        "description": "The life table differs for men and women: women live longer on average, so the same premium pays them less each month.",
        "type": "string",
        "enum": [
          "male",
          "female"
        ]
      },
      "rate": {
        "title": "Interest rate",
        "description": "The yearly rate the insurer credits, compounded once a year. Type it from a quote or a bond yield.",
        "type": "number",
        "x-unit": "percent",
        "minimum": 0,
        "maximum": 15
      },
      "freq": {
        "title": "Payouts",
        "description": "Monthly (12 a year), quarterly (4), or yearly (1). The first payout is one period after you buy.",
        "type": "string",
        "enum": [
          "12",
          "4",
          "1"
        ]
      },
      "certain": {
        "title": "Guaranteed years",
        "description": "Years the payouts continue even if you die, to your heirs (life with period certain); 0 for life only.",
        "type": "integer",
        "minimum": 0,
        "maximum": 40
      }
    }
  },
  "outputs": {
    "payout": {
      "label": "Each payout",
      "description": "The level payout for life (and the guaranteed years) that the premium buys.",
      "format": "money"
    },
    "yearly": {
      "label": "Income per year",
      "description": "Each payout × payouts a year.",
      "format": "money"
    },
    "payoutRate": {
      "label": "Payout rate",
      "description": "Income per year ÷ premium.",
      "format": "percent"
    },
    "expectedTotal": {
      "label": "Expected total payouts",
      "description": "Every payout times the chance it is paid, added up, not discounted.",
      "format": "money"
    },
    "expectedYears": {
      "label": "Expected years of payouts",
      "description": "Expected payouts ÷ income per year.",
      "format": "number"
    },
    "presentValue": {
      "label": "Present value of expected payouts",
      "description": "Every expected payout discounted to the day you buy: equal to the premium.",
      "format": "money"
    },
    "breakEvenAge": {
      "label": "Premium back at age",
      "description": "Your age when the payouts add up to the premium, if you are alive.",
      "format": "number"
    },
    "breakEvenChance": {
      "label": "Chance of getting the premium back",
      "description": "The chance payouts are still made on the day they add up to the premium.",
      "format": "percent"
    }
  },
  "defaultAnswer": {
    "inputs": {
      "premium": 100000,
      "age": 65,
      "sex": "male",
      "rate": 4.5,
      "freq": "12",
      "certain": 0
    },
    "outputs": {
      "payout": 715.2409387377915,
      "yearly": 8582.891264853497,
      "payoutRate": 8.582891264853497,
      "expectedTotal": 155132.91809852593,
      "expectedYears": 18.07466893280908,
      "presentValue": 100000.00000000007,
      "breakEvenAge": 76.66666666666667,
      "breakEvenChance": 74.82865454855143
    },
    "text": "A premium of $100,000.00 at age 65 pays about $715.24 each period, $8,582.89 a year."
  },
  "examples": [
    {
      "given": {
        "premium": 100000,
        "age": 65,
        "sex": "male",
        "rate": 4.5,
        "freq": "12",
        "certain": 0
      },
      "expect": {
        "payout": 715.2409387377909,
        "yearly": 8582.89126485349,
        "expectedYears": 18.074668932809082,
        "breakEvenAge": 76.66666666666667,
        "breakEvenChance": 74.82865454855143
      },
      "source": "Investor.gov: Annuities (immediate annuity, payments for life), https://www.investor.gov/introduction-investing/investing-basics/investment-products/insurance-products/annuities; SSA 2023 period life table, https://www.ssa.gov/oact/STATS/table4c6.html; expected present value Σ v^t × S(t), checked in Python from the SSA table (content.mdx)"
    },
    {
      "given": {
        "premium": 100000,
        "age": 65,
        "sex": "female",
        "rate": 4.5,
        "freq": "12",
        "certain": 0
      },
      "expect": {
        "payout": 651.4396262422904,
        "expectedTotal": 161207.27720171263
      },
      "source": "Investor.gov: Annuities (immediate annuity, payments for life), https://www.investor.gov/introduction-investing/investing-basics/investment-products/insurance-products/annuities; SSA 2023 period life table, https://www.ssa.gov/oact/STATS/table4c6.html; checked in Python from the SSA table (content.mdx)"
    },
    {
      "given": {
        "premium": 200000,
        "age": 70,
        "sex": "male",
        "rate": 5,
        "freq": "1",
        "certain": 10
      },
      "expect": {
        "payout": 19353.279841121697,
        "breakEvenAge": 81,
        "breakEvenChance": 66.68856299111563
      },
      "source": "Investor.gov: Annuities (immediate annuity, payments for life), https://www.investor.gov/introduction-investing/investing-basics/investment-products/insurance-products/annuities; SSA 2023 period life table, https://www.ssa.gov/oact/STATS/table4c6.html; checked in Python from the SSA table (content.mdx)"
    },
    {
      "given": {
        "premium": 100000,
        "age": 65,
        "sex": "male",
        "rate": 0,
        "freq": "12",
        "certain": 0
      },
      "expect": {
        "payout": 461.0503995570671,
        "expectedTotal": 100000
      },
      "source": "Investor.gov: Annuities (immediate annuity, payments for life), https://www.investor.gov/introduction-investing/investing-basics/investment-products/insurance-products/annuities; SSA 2023 period life table, https://www.ssa.gov/oact/STATS/table4c6.html; hand calculation in content.mdx: with no interest, premium = payout × expected number of payouts"
    },
    {
      "given": {
        "premium": 96000,
        "age": 90,
        "sex": "female",
        "rate": 0,
        "freq": "12",
        "certain": 40
      },
      "expect": {
        "payout": 200,
        "expectedTotal": 96000,
        "breakEvenAge": 130,
        "breakEvenChance": 100
      },
      "source": "Investor.gov: Annuities (immediate annuity, payments for life), https://www.investor.gov/introduction-investing/investing-basics/investment-products/insurance-products/annuities; SSA 2023 period life table, https://www.ssa.gov/oact/STATS/table4c6.html; hand calculation in content.mdx: 40 × 12 = 480 certain payouts at 0%, 96,000 ÷ 480 = 200"
    }
  ],
  "sources": [
    "U.S. Securities and Exchange Commission, Investor.gov: Annuities (immediate and deferred annuities, payments for life), retrieved 2026-10-01. https://www.investor.gov/introduction-investing/investing-basics/investment-products/insurance-products/annuities",
    "Social Security Administration, Office of the Chief Actuary, Actuarial Life Table: 2023 period life table for the Social Security area population, as used in the 2026 Trustees Report, retrieved 2026-09-29. https://www.ssa.gov/oact/STATS/table4c6.html"
  ],
  "related": [
    "annuity-payout",
    "annuity",
    "retirement-income",
    "life-expectancy"
  ],
  "changelog": []
}