How to use this calculator
- Enter what the quote says you would pay and the monthly income it promises, before tax.
- Choose the payout option the quote is for. For a guaranteed period, pick its length; for a joint and survivor quote, enter your spouse's age and the share the survivor keeps.
- Enter your age and the age the income starts: the same age for an immediate annuity, a later one for a deferred annuity.
- Set the rate a safe alternative would pay you, such as a CD or a Treasury of about the same length, compounded yearly.
- If you are buying a QLAC with traditional IRA or 401(k) money, tick it under More options to check the QLAC rules.
The numbers already filled in are an example: a typical quote for a 65-year-old man paying $100,000. Replace them with the quote you have.
How it's calculated
1. The payout rate is not a return
The payout rate is a year's income divided by what you pay: $7,956 on $100,000 is 7.96%. Each payment is part interest and part your own money coming back, so the return depends on how many payments you receive, which depends on how long you live. Your payments add up to $100,000 by age 77 and 7 months.
2. The age you must live to
The calculator compares the annuity with investing the same money at the rate you enter and taking out the same payments yourself. That account runs dry at the age the annuity starts to pay more: on the example, at 5.0%, age 84 and 7 months. Each payment is valued at today's worth, the present value, and the annuity is ahead once the payments received are worth at least what you paid. With a guaranteed period or a cash refund, what your beneficiary would receive counts too.
3. Your chance of living that long
The chance of reaching each age comes from the mortality table the IRS publishes each year for pension plans (Notice 2025-40 for 2026): for each age, the probability of dying within the year, separately for men and women, with a unisex blend. Deaths are spread evenly through each year of age. A 65-year-old man has a 57% chance of reaching 84 and 7 months on the 2026 table; a woman of 65 buying the same quote would have a 64% chance of reaching 84 and 7 months. On average a man of 65 lives another 20.4 years. For a joint quote the two lifespans are treated as independent.
4. The return, at each age and on average
The return if you die at a given age is the internal rate of return on what you paid and what you received: on the example, 2.4% at 80, 5.2% at 85 and 7.2% at 95, and −100% if you die before the first payment of a life-only annuity. The average return is the rate at which the payments you can expect, each weighted by the chance you are alive to receive it, are worth exactly what you pay: 4.66% on the example. Valued at 5.0%, those expected payments are worth 97 cents per dollar paid, its money's worth, and the monthly income that would make the quote worth exactly a dollar per dollar is $683.44.
5. Payout options
A single life annuity stops at your death. A guaranteed period keeps paying your beneficiary to the end of the period, and a cash refund pays them what you paid less the payments already made. A joint and survivor annuity keeps paying while either of you lives, at the survivor's share after the first death: a man of 65 and a woman of 63 with a quote of $562 a month at 100% to the survivor have a 57% chance of coming out ahead of investing at 5.0%, and 22% at 50% for the same quote. For a joint quote the calculator shows the chance of coming out ahead rather than one age, because two lifespans decide it.
6. QLACs
With QLAC ticked, the calculator checks the rules in Treasury Regulation 1.401(a)(9)-6(q): a premium of no more than $210,000 in 2026, assuming no earlier QLAC; income starting by the month after you turn 85; no guaranteed period; and a yearly increase of less than 5%. Paying $200,000 at 65 for $5,388 a month from 80 qualifies, and beats investing the money at 5.0% if a man lives to 87 and 9 months, a 43% chance. It does not figure the smaller required minimum distributions the purchase brings.
Assumptions and limits
- Lifespans come from the IRS's table for pension plans for the year you buy. That table blends people still working with people retired, and it already projects lifespans to keep improving by a set number of years that depends on age (8 years for men and 9 for women at 80, more at younger ages); it is not a forecast for your birth year. People who buy income annuities have, on average, lived longer than the general population, as the Treasury has observed, so if your health is like theirs, your chances of reaching each age are higher than shown. Your own health and family history can make your lifespan very different from any table's.
- The comparison is with a safe investment earning the rate you enter, compounded yearly, every year, with certainty. A riskier portfolio might earn more or less. The annuity's payments are guaranteed by the insurer, subject to its ability to pay and to your state's guaranty association limits, which are not modeled. The rate filled in suits an immediate annuity bought around 65; a deferred annuity's payments are further away.
- Payments are monthly, the first one a month after income starts. Insurers' dates differ by days or weeks; a month's shift moves the values by about 0.4% at a 5% rate. For a quote paid quarterly or yearly, the results are an approximation.
- Results are before tax. With traditional IRA or pre-tax 401(k) money the comparison withdraws the same payments, so the tax is about the same on both sides. With after-tax money, part of each payment is a tax-free return of the premium while a safe investment's interest is taxed as it is earned, so the before-tax comparison understates the annuity.
- Fees are whatever the quote already reflects: a quote is the income after the insurer's costs.
- A cash refund is paid the month after death; a QLAC may pay it as late as the end of the following year. The QLAC checks assume this is your only QLAC and, for a joint quote, that the survivor is your spouse and your sole beneficiary.
- It does not get quotes, figure tax or the exclusion ratio, or model inflation-linked payments, installment refunds, a guaranteed period or refund on a joint quote, a non-spouse survivor's QLAC limits, the required minimum distributions a QLAC lowers, variable, indexed or registered index-linked annuities and their income riders, insurers' ratings, or lifespans adjusted for your health.
Input field details
What to enter in each box, where to find the number, and how this calculator treats it. When two calculators give different answers from the same numbers, it's usually because they handle one of these differently.
Monthly income quoted
The first monthly payment the quote promises, before tax.
Where to find itThe quote, usually shown as the monthly income or payout for the premium.
How this tool treats itPayments are monthly. If you choose a yearly increase, this is the first year’s payment. For a quote paid quarterly or yearly, divide it into a monthly amount; the results are then an approximation. The $663 filled in is the median of twelve insurers’ life-only quotes for a man of 65 paying $100,000 on one public annuity marketplace on October 30, 2026.
Allowed range$1 to $1,000,000 a month
Payout option
The payout option the quote is for. Life only pays while you live. Life with a guaranteed period keeps paying your beneficiary to the end of the period if you die sooner. Life with cash refund pays your beneficiary what you paid less the payments already made. Joint and survivor pays while either of you lives.
Where to find itThe quote names it, often as “life only”, “10-year certain”, “cash refund” or “100% joint and survivor”.
How this tool treats itEach option is valued with what your beneficiary would receive, so the options compare on one footing. A cash refund is paid the month after death.
Not includedInstallment refunds, a guaranteed period or refund on a joint quote, and a period-certain-only product.
Years guaranteed
How many years of payments the quote guarantees.
Where to find itThe quote, as in “life with 10 years certain”.
How this tool treats itThe guaranteed period starts with the first payment, including on a deferred quote. If you die sooner, payments continue to your beneficiary to the end of the period, on their usual dates.
Allowed range5, 10, 15, 20, 25 or 30 years
Your age now
Your age in whole years, as on the quote.
Where to find itThe quote states the age it was priced for.
How this tool treats itTreated as your exact age on the day you buy.
Allowed range40 to 95
Income starts at age
Your age now for an immediate annuity; the later age the income starts at for a deferred one.
Where to find itThe quote’s income start date.
How this tool treats itThe first payment comes a month after this age, or a month after you pay for income that starts now. An age below your age now is read as now. Insurers’ dates differ by days or weeks; a month’s shift moves the values by about 0.4% at a 5% rate.
Allowed range40 to 100
Sex, for the life table
The sex the quote was priced for, or Unisex.
How this tool treats itYour chances of living to each age come from the IRS’s mortality table for pension plans for the year you buy, which has columns for men and women and a 50/50 unisex blend. The table describes people covered by pension plans, working and retired, and already projects lifespans to keep improving. People who buy income annuities have on average lived longer, so if your health is like theirs, your chances of reaching each age are higher than shown.
Not includedYour own health and family history, which can make your lifespan very different from any table’s.
Spouse’s age now
Your spouse’s age in whole years, for a joint and survivor quote.
Where to find itThe quote states both ages.
How this tool treats itYour two lifespans are treated as independent of each other.
Allowed range40 to 95
Spouse’s sex, for the life table
Your spouse’s sex for the life table, or Unisex.
How this tool treats itRead from the same IRS table as yours.
What the money could earn instead
A safe yearly yield you could get instead, such as a CD’s APY or a Treasury yield for about the same length of time as the annuity’s payments.
Where to find itA bank’s CD rates, or the Treasury yield curve. A Treasury yield compounds twice a year, so 4.9% is about 5.0% here.
How this tool treats itCompounded yearly, with certainty, every year. The comparison invests what you pay at this rate and takes out the same payments the annuity makes; the age to live to is when that account would have less left than the annuity would still pay your heirs. The 5.0% filled in is the Treasury yield curve at the payments’ average timing (about 9 years) on October 30, 2026: 4.90%, compounded twice a year, which is 4.96% compounded yearly. It suits an immediate annuity bought around 65; a deferred annuity’s payments are further away, where yields are usually different.
Allowed range0% to 15%
Not includedA riskier portfolio, which might earn more or less. The annuity’s payments depend on the insurer’s ability to pay and your state’s guaranty association limits.
Yearly increase in income
The fixed yearly raise in the payments, if the quote has one.
Where to find itThe quote, sometimes as a COLA rider or an increasing payment option.
How this tool treats itEach raise applies once a year from the first payment, and every payment is rounded to the cent.
Allowed range0% to 5%
Not includedPayments linked to the Consumer Price Index.
Income drops when
Either of you dies if the payment falls to the survivor’s share at the first death; You die if it falls only when you die before your spouse.
Where to find itThe quote or contract describes when the survivor payment starts.
How this tool treats itWith the survivor getting 100%, the two give the same results.
Bought as a QLAC with traditional IRA or 401(k) money
Tick it if you are buying the annuity as a qualifying longevity annuity contract (QLAC) inside a traditional IRA or a 401(k).
How this tool treats itIt checks the QLAC rules: a premium of no more than the year’s limit, less any QLAC premiums you paid before; income starting by the first day of the month after you turn 85; no guaranteed period; and a fixed yearly increase of less than 5% (an increase tied to a cost-of-living index is allowed separately and is not modeled here). It assumes this is your only QLAC and, for a joint quote, that your spouse is your joint annuitant and sole beneficiary. The results are figured either way.
Not includedA Roth IRA, to which the QLAC rules do not apply, and the required minimum distributions a QLAC can lower.
Inflation, for today’s dollars
The yearly inflation rate to show your income at 85 in today’s dollars.
How this tool treats itUsed only for that figure. It does not change any other result.
Allowed range0% to 10%
Questions
What is a good payout rate for an annuity?
How long do you have to live for an annuity to pay off?
What return does an annuity pay?
Is life only or a guaranteed period better?
What is a QLAC and what are its limits?
Are annuity payments taxable?
Version history
- October 30, 2026 (version 1.0.0): First version: an income annuity quote's payout rate, the age you must live to for it to beat investing the money, your chance of reaching it from the IRS mortality table, its return by age, and the QLAC checks.