How Much Does a $1 Million Annuity Pay per Month?

Hi there, Stan The Annuity Man, America's annuity agent, licensed in all 50 states, and that's including yours. I'm the top agent in the country, but enough about me. Let's talk about you and what an annuity pays if you have a million dollars. That's a good question. Number one, it's a good question if you've made it to a million dollars where you can put a million dollars into an annuity. The problem is you can't answer it. Agents, when you ask that, they'll salivate, but the question is A, do you need an annuity, and if so, what type? And then B, when it comes to what a million-dollar annuity pays, again, what type and how do you want to structure it? And all that good stuff and this and that and that. Let's talk about your million dollars and what it pays.

The Two Questions

Okay, rich person, you got a million bucks out there, you're a player, now let's talk about it. Number one, do you need an annuity? Maybe, maybe not. Let's figure it out if you do, and then talk about the types and how they "pay." So first thing first, let's ask two questions. What do you want the money to contractually do? When do you want those contractual guarantees to happen?

From those two answers, we will segue into an acronym I have come up with called PILL. P stands for principal protection, I stands for income for life, L stands for legacy. The other L stands for long-term care/confinement care. If you don't need to solve for one or more of those items in the PILL, then you don't need an annuity, period. But let's go back to the two questions. I'm assuming that if you've asked what a million-dollar annuity pays, you're thinking of income. You're thinking pension-type income. Let's go with that under that premise. So, the question I have for you, and let's just say I go through the two questions, what do you want the money to contractually do? Lifetime income. When do you want those contractual guarantees to start? That's a big question because it will determine what type of annuity to use.

Life Expectancy

If you need it to start immediately or within a year, that's a Single Premium Immediate Annuity. If you need it to defer out, other types of annuities can contractually guarantee a future lifetime income stream at a future start date. That said, lifetime income is primarily based on your life expectancy at the time you take the payment or life expectancies if it's joint life with your spouse or partner. I'm going to need dates of birth to run the quote. Also, to run the quote, and with our annuity calculators at The Annuity Man , you can punch in the numbers, or I can punch in the numbers for you after we talk; either way, you're going to see the best quotes in the country, the highest contractual guarantees on the planet because we quote all carriers.

Annuity Quotes

We won't go into it with some agenda if we sell enough of this carrier and go on the trip to Bora Bora. We don't do that. We only look for the highest contractual guaranteed number. You're going to need to give me your state of residence, date of birth, the amount of money, that if it's like a million even or if it's $1,000,001, blah, blah, blah, give us that specific amount and we will run the quote for the income start date that you specify. Now, understand that annuity quotes are commodities, so not one carrier will always win that million-dollar quote you're looking for. It all comes down to how you structure it. And the other thing, in addition to joint life or single life, is, do you want that million dollars to go to somebody in your family or whatever's left of it after you die?

The Structure

I'm assuming if you have a million dollars and you're looking to buy a lifetime income stream that you've worked pretty hard for it, and you want to make sure that number one, first and foremost, the lifetime income stream is guaranteed regardless of how long you live. And that annuity company's on the hook to pay. The second thing is to structure the policy so that 100% of any unused money goes to the beneficiaries. Now, if you set it up joint life, a million-dollar payout will be based on both life expectancies.

Let's just say you pass away; the income stream will continue uninterrupted and unchanged for your spouse's life. And when they pass away we can structure it so that any unused money goes to the beneficiaries. It's important to reiterate that lifetime income is a combination of return of principal plus interest.

Now, the guarantees are the same regardless of what account type you use: IRA, non-IRA like a non-qualified checking type account, or a Roth IRA, the guarantees are the same. The difference between these two is how income is taxed. Now, it's a return of principal plus interest, so when I say that whatever money's left to the beneficiaries, that's with money being subtracted out of your account the longer you live. If you outlive your life expectancy, there's a possibility there's zero in the account even though you'll get paid for the rest of your life. I have thousands of clients who have zero in their accounts from their Immediate Annuities, Deferred Income Annuities, or QLACs, but the income is still coming. That's the benefit proposition that only annuities can provide, which is a lifetime income stream. Which is, I'm assuming, what you're looking for with your question how much does a million dollars pay? For life. And I only know once you die. Up until that point, it's a pure transfer of risk. But remember, it's customizable and the policy and how you structure it, there are 30, 40 different ways. The highest payment is life only. This means when your Learjet hits the mountain, you might have one with a million dollars looking to put into an annuity. The money goes poof. But it's the highest payment because you're shouldering some of that risk. But most people don't do that. Most people put in some type of guarantee so that whatever money's left in the account goes to the beneficiary or the family or the trust if you have a trust as the beneficiary, etc.

Getting to another point, annuities don't always have to pay for life. So, if you're asking, hey, what does a million dollar annuity pay but you only want it to pay for 10 years or you only want it to pay for 20 years, that's a period certain quote, which means that it's not life expectancy based, it's interest rate based.

Client Example

But you might need a gap of income fill that you want that million dollars to be applied for to pay for a specific period of time. I have that happen all the time. A guy called me the other day and said, "I need 12 years of gap fill. I need to make sure that X amount is going to be hitting my bank account every single month for the next 12 years." And, of course, I asked, "Well, what happens in 12 years?" Well, in 12 years, he had all kinds of other income kicking in, so we did that period certain. When it comes down to what does a million dollars pay, what does it do, it depends on the type. We could even look at what does a million dollars pay if you put it in a Multi-Year Guarantee Annuity, which is a CD-type annuity, well that's not a lifetime income stream but you're getting interest. It depends on your chosen duration and the guaranteed interest rate you're getting annually.

So, the million-dollar question, what does a million-dollar annuity pay? It comes down to the type of annuity, how you want to structure it, and where you live because all Fixed Annuities are regulated and approved at the state level. And we can do that for you. One last note about the million dollar annuity question, which is what a million dollar annuity pays, what's the payout on that, in most cases, what I've found, and I am the top agent out here, I've got thousands of clients, and I got thousands of clients that are well-heeled, and they've made a lot of money. Most of the time, the millionaire, the successful dude or dudette that is trying to look at this, they're trying to set something up for their family or their kids or somebody they're trying to take care of.

Really rich people, in my opinion, aren't buying the annuities for themselves. They're buying it for their family. And that might also be you, so you might want to think about it from that standpoint. A great story and he's a good client of mine, but he's one of the best. He's a corn futures trader, I mean it's bizarre, like futures. He's trading futures contracts, and he's really, really, really, really good at it. Really good, to the point where every single year he takes part of the profits, and by the way his profits are legit and they're big and they're multiple millions of dollars, but every single year this guy buys an immediate annuity or a deferred income annuity for his wife because guess what? His wife doesn't care about futures, doesn't care about corn futures, doesn't care about the stock market and only cares about the kids and the grandkids' lives and just lifestyles.

That might be you out there. It might not be. You might be looking for something just for you. But I see many cases of people looking for this in a pensionless world, creating a pension for their spouse or kids. Me personally, Stan The Annuity Man, my wife and my kids have annuities galore. They couldn't spell the word annuity unless they looked at my hat, but I have set things up for them so that when my Learjet does hit the mountain, all that's going to kick in, and there's going to be a lifetime income stream that none of them can ever outlive. Is that bad parenting? Probably. But that's what us parents do, right? We try to take care of people, and you can do that with annuities. With that being said, I will see you on the next Stan The Annuity Man blog.

Never forget to live in reality, not the dream, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.