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After years of diligently saving, and checking retirement calculators with cautious optimism, many near-retirees now face a real challenge: turning savings into sustainable income. At that point, it's no longer just about growing your money, after all. It's about making it last. And, that shift in mindset has become even more critical in today's climate.
After all, , but it's still eating into fixed budgets. Market volatility continues to rattle investors. And with people living longer than ever, the fear of outlasting your savings is very real. That's why more Americans are — not as flashy investments, but as practical tools for income stability. These financial products, sold by insurance companies, offer guaranteed monthly income in exchange for a lump-sum payment.
Unlike the ups and downs of stocks or bonds, annuities can give retirees a level of financial consistency that's hard to come by elsewhere. But what kind of monthly income can you actually get , like a $400,000 annuity? That's what we'll examine below.
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So, what does a $400,000 annuity really pay? The answer depends on a few key factors, including your age, gender and the type of annuity you choose. That said, it's important to understand the range of potential monthly payouts, as that information can help you decide if locking in guaranteed income is the right move for your retirement plan. Here's a closer look at what you might earn each month from a $400,000 annuity, according to :
These figures assume a single-life immediate fixed annuity, meaning the payments start right away and continue for the rest of your life. As shown, the older you are at the time of purchase, the higher the monthly income you'll receive because the insurance company expects to make payments for fewer years. can also play a role in what your monthly payouts are.
It's also worth noting that men typically receive higher payments than women since women have longer life expectancies. That means the same $400,000 investment is stretched over more years for a female annuitant, leading to slightly smaller monthly checks. And, if you opt for a joint-life annuity, which continues to pay your spouse after you die, your monthly income will be lower, as evidenced above, but it can be a good trade-off for couples who want lifetime income security for both partners.
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A $400,000 annuity isn't small change, and depends, in large part, on your broader retirement plan. But for many retirees, it can offer some big advantages, including:
Having a fixed amount of money arriving in your bank account every month can reduce a lot of financial stress, especially if you're nervous about withdrawing from your 401(k) or navigating stock market swings. With payments that could range from about $2,300 to $4,000 per month, a $400,000 annuity or help cover your core expenses.
One of the biggest financial unknowns in retirement is how long you'll live. Annuities offer peace of mind because they continue to pay as long as you're alive, even if you live to 100 or beyond. That's something traditional investment portfolios don't guarantee.
Unlike individual retirement accounts (IRAs) or mutual funds, annuity payments aren't tied to how the market is performing. That makes them especially attractive when interest rates fluctuate or a market correction is looming. That said, there are trade-offs to be aware of, like:
A $400,000 annuity can be . Depending on your age and gender, it could deliver anywhere from around $2,200 to $4,100 in monthly income, enough to cover essentials or create some extra breathing room in your budget.
Still, annuities aren't the right solution for every person. Before committing such a large portion of your savings, it's important to weigh the trade-offs, like reduced liquidity, potential tax implications and inflation risks. You should also compare the options, ask questions and consider working with an expert who can help you find the right fit.
