Life Annuity Annual Payout Calculator

Insurance
Updated Apr 2026 • Has calculator

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

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.

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)

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