# Immediate annuity: what will it pay?

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.

- Page: https://www.acalculator.org/finance/immediate-annuity-calculator
- JSON spec: https://www.acalculator.org/finance/immediate-annuity-calculator.json
- Version: d506f7fbb332

## Default answer

Example with the default inputs (Premium $100,000.00, Age when you buy 65, Sex Male, Interest rate 4.5%, Payouts Monthly, Guaranteed years 0): A premium of $100,000.00 at age 65 pays about $715.24 each period, $8,582.89 a year.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| premium | Premium | The lump sum you pay the insurer once, at the start. |
| age | Age when you buy | Your age in whole years on the day you buy, from 50 to 90. |
| sex | Sex | The life table differs for men and women: women live longer on average, so the same premium pays them less each month. |
| rate | Interest rate | The yearly rate the insurer credits, compounded once a year. Type it from a quote or a bond yield. |
| freq | Payouts | Monthly (12 a year), quarterly (4), or yearly (1). The first payout is one period after you buy. |
| certain | Guaranteed years | Years the payouts continue even if you die, to your heirs (life with period certain); 0 for life only. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| payout | Each payout | The level payout for life (and the guaranteed years) that the premium buys. |
| yearly | Income per year | Each payout × payouts a year. |
| payoutRate | Payout rate | Income per year ÷ premium. |
| expectedTotal | Expected total payouts | Every payout times the chance it is paid, added up, not discounted. |
| expectedYears | Expected years of payouts | Expected payouts ÷ income per year. |
| presentValue | Present value of expected payouts | Every expected payout discounted to the day you buy: equal to the premium. |
| breakEvenAge | Premium back at age | Your age when the payouts add up to the premium, if you are alive. |
| breakEvenChance | Chance of getting the premium back | The chance payouts are still made on the day they add up to the premium. |

## 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.

## Worked examples

1. premium = $100,000.00, age = 65, sex = male, rate = 4.5%, freq = 12, certain = 0 gives payout = $715.24, yearly = $8,582.89, expectedYears = 18.074669, breakEvenAge = 76.666667, breakEvenChance = 74.828655%. 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.
2. premium = $100,000.00, age = 65, sex = female, rate = 4.5%, freq = 12, certain = 0 gives payout = $651.44, expectedTotal = $161,207.28. 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.
3. premium = $200,000.00, age = 70, sex = male, rate = 5%, freq = 1, certain = 10 gives payout = $19,353.28, breakEvenAge = 81, breakEvenChance = 66.688563%. 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.
4. premium = $100,000.00, age = 65, sex = male, rate = 0%, freq = 12, certain = 0 gives payout = $461.05, expectedTotal = $100,000.00. 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.
5. premium = $96,000.00, age = 90, sex = female, rate = 0%, freq = 12, certain = 40 gives payout = $200.00, expectedTotal = $96,000.00, 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.

## FAQ

### What is an immediate annuity?

A contract with an insurer. You pay one lump sum (the premium), and the insurer starts paying you a fixed income right away, usually for the rest of your life. It is also called a single premium immediate annuity (SPIA). Investor.gov explains the types of annuities and their risks.

### How is the payout worked out?

The premium buys every future payout at its expected present value. Each payout is counted with the chance you are alive to get it, from the Social Security life table, and discounted at the interest rate. The payout is the premium divided by the sum of those weights.

### Why does a woman get a smaller payout than a man of the same age?

Women live longer on average, so the insurer expects to make more payouts. With the same premium, each payout is smaller. At 65 and 4.5%, $100,000 buys about $715 a month for a man and $651 for a woman here.

### What do guaranteed years do?

With life and 10 years certain, payouts go on for at least 10 years, to your heirs if you die early, and then for the rest of your life. The guarantee costs something, so each payout is a little smaller than with life only.

### Will an insurer pay what this calculator shows?

Probably less. This is a fair-price estimate with no costs, profit, or taxes, using a general population life table. Insurers use their own tables (annuity buyers live longer than average) and rates. Use the calculator to compare options, and get real quotes before you buy.

### What interest rate should I use?

The rate insurers can earn on safe bonds of matching length. Type one from a current quote or a high-grade bond yield. The calculator does not fetch rates, and a higher rate gives a higher payout.

### What is the chance of getting my premium back?

The payouts add up to the premium on a certain date; the calculator shows your age then and the chance that payouts are still being made on that date, from the life table. If you die earlier with no guarantee, the payouts stop.

## 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