Life Annuity Annual Payout

Insurance
Updated Apr 2026 • Has calculator

Estimated annual income from a life annuity, assuming payments last until the expected end of life.

What is Life Annuity Payout?

A life annuity pays a fixed income stream from a lump sum for the remainder of the annuitant's life, eliminating longevity risk. The estimated annual payout is calculated identically to a fixed-term annuity but uses remaining life expectancy as the period. Because the insurer bears the longevity risk across a pool of annuitants, the actual contract rate may differ from this estimate; this calculator provides a planning approximation. Life annuities are a key component of retirement income strategies.

Formula

PMT = Balance × [r / (1 − (1 + r)^−n)] where n = life expectancy

Worked Example

Worked example — Hypothetical retiree aged 65

2026

Step 1  Annuity balance: $500,000
Step 2  Interest rate: 4%, Life expectancy: 25 years (to age 90)
Step 3  PMT = $500,000 × [0.04 / (1 − 1.04^−25)]
Step 4  PMT ≈ $500,000 × 0.06401 ≈ $32,005/yr
Step 5  → A $500K life annuity at 4% pays ~$32,000/yr if you live to 90

Source: Investopedia — Life Annuity (2026-01-01)

Calculate Life Annuity Payout

Remaining years of life (e.g. 25 if age 65, life table to 90)

Estimated Annual Payment

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Not investment advice.

How to Interpret Life Annuity Payout

< 20000
Low Payout — may need to supplement with other income
20000 – 50000
Moderate Payout — covers basic retirement expenses
50000 – 100000
Comfortable Payout — solid retirement income base
> 100000
High Payout — well-funded lifetime income stream
Sources
  1. Investopedia — Life Annuity