A 0,000 Annuity Will Score You This Monthly

A $200,000 Annuity Will Score You This Monthly

How Much Does a $200,000 Annuity Pay?

How Much Does a $200,000 Annuity Pay?

An annuity can be an attractive option for building your retirement nest egg. Adding guaranteed retirement income to your retirement can bring you financial stability. But the exact amount you’ll get from each month’s annuity will vary. Let’s break down what a $200,000 annuity will pay you each month. A financial advisor can help put together a financial plan for your retirement needs and goals.

What is an Annuity?

An annuity is a financial contract between an investor and an insurance company that locks in a regular monthly payment in exchange for an investment. In some cases, you will provide all the funds in advance. In other cases, you would make the payments to your insurance company over a long period of time.

After you provide the funds, your insurance company will make regular payments of a predetermined amount for a specific period of time. Most people who buy annuities use the funds as an additional income stream for retirement. But retirement is not a necessity. You can buy an annuity if you want a guaranteed source of income for any situation.

Factors Affecting Payments

The exact amount you can expect from a $200,000 annuity will vary based on three factors:

  • The interest rate: When you register your annuity, you will see an interest rate defined in the contract. You’ll want to lock in a high interest rate for higher payments.

  • When you want the payments: You can choose between an immediate annuity or a deferred annuity. An immediate annuity starts immediately. But you’ll usually see a higher monthly payment with a deferred annuity.

  • Type of annuity: The monthly payment you receive from an annuity may or may not change. If you sign up for a fixed annuity, you will put in guaranteed monthly payments. If you sign up for a variable annuity, you won’t get guaranteed monthly payments. Variable annuities are usually linked to market factors. So, if interest rates rise, your monthly payment may increase.

The table below gives examples of how much a $200,000 lifetime fixed income annuity would pay for annuitants of various ages. The figures derive from the Charles Schwab calculator.

Estimated monthly payments of one year single life at age Single + Single Life 10 Years Certain Single Life + 20 Years Single Life + Cashback 85 $ 2,586 $ 1,809 $ 1,203 $ 1,836 80 $ 1,945 $ 1,632 $ 1,197 $ 1,542 $ 1, $1,173 $1,067

Your unique annuity details will determine the monthly payment. Take the time to carefully review the information in your annuity contract to make sure your payment is what you want it to be.

Should You Get An Annuity?

How Much Does A $200,000 Annuity Pay Per Month?

How Much Does A $200,000 Annuity Pay Per Month?

Depending on your financial circumstances, an annuity could be a reliable income stream for your retirement. One of the factors to consider is the need for reliable income. A fixed annuity provides a reliable income stream whether you are retired or not. Another factor to consider is your expected longevity. If you have a long life expectancy, an annuity can help you support yourself for that long period. A third factor relates to the relationship you want to be in managing your finances. An annuity sends you a monthly payment every month. You won’t have to monitor investments, rebalance a portfolio or manage tenants to get this income.

Now, let’s consider three reasons why another investment vehicle might be better:

  • High fees: Unfortunately, most annuities come with high fees. If you want to avoid fees, choosing another investment is the way to go.

  • No access to the principal: Once you register your annuity, you will not be able to withdraw your funds. Therefore, if a large cost arises, this principal is not accessible.

  • Other savings priorities: If you want to save money for other purchases, the costs of the annuity may be too much to bear.

Base line

How Much Does A $200,000 Annuity Pay Per Month?

How Much Does A $200,000 Annuity Pay Per Month?

An annuity can be a useful investment option that adds value to your retirement. But it is not the right choice for everyone. Depending on your financial circumstances you may also want to consider other options. If you can’t decide whether or not an annuity is right for you, it’s time to talk to a financial advisor. He or she can help you assess your overall financial picture to see where an annuity might fit into the picture.

Quitting Tips

  • Work with a financial advisor to help you lay out a solid retirement plan. SmartAsset’s free tool matches you with up to three financial advisors serving your area, and you can interview your advisor at no cost to decide which one is right for you. If you’re ready to find an advisor to help you achieve your financial goals, get started now.

  • Saving for retirement starts with understanding how much you should save. SmartAsset’s free retirement calculator can help you see how much you should save.

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The post How Much Does a $200,000 Annuity Pay Per Month? appeared first on SmartAsset Blog.

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