How lifetime annuities operate
An annuity converts a lump sum of accumulated capital into a guaranteed stream of income for life, eliminating the risk of outliving your money (longevity risk).
Payout rates reflect prevailing government bond yields, life expectancy tables at purchase age, escalation choices, and survivor guarantees.
Worked example: Annuity purchase
Purchasing a level single-life annuity with $100,000 at a 6.8% benchmark rate generates $6,800 annually ($567 per month) guaranteed for life. At this rate, the purchase price is fully recovered in approximately 14.7 years.
Inputs for the annuity calculator
Purchase Capital & Rate
Enter the lump sum premium and benchmark market annuity rate for your age.
Escalation & Guarantees
Select level or escalating payouts and choose single or joint life coverage.
CALCULATOR QUESTIONS
Annuity calculator questions
Can I change my mind after purchasing an annuity?
Lifetime annuities are generally irreversible contracts; once purchased, you surrender access to the capital in exchange for guaranteed lifetime income.
What happens to the annuity if I die early?
Without a guarantee period or value protection, payments cease upon death. Choosing a 5 or 10-year guarantee ensures remaining payments go to your beneficiaries.