Life Annuity Calculator
Estimate monthly retirement income from a lump sum using life annuity assumptions.
Your annuity details
Model income without needing to know a payout rate first.
Currency
The amount used to buy the guaranteed annuity.
Your age when the annuity income starts.
Pricing basis
Illustrative pricing basis only.
Income increase option
Higher increases lower starting income.
Health pricing adjustment
Enhanced health may increase income.
Guarantee period
Longer guarantees may lower income.
Spouse / survivor benefit
Survivor benefits may lower starting income.
Estimated guaranteed income
You could receive about £5,304 per month for life.
Based on a £1,000,000 lump sum and an illustrative 6.37% annual payout rate.
Estimated monthly income
£5,304
Estimated starting monthly income before tax.
Estimated annual income
£63,650
Starting annual income based on the selected payout factors.
Effective payout rate
6.37%
Annual income divided by your lump sum.
Guarantee period value
£636,500
Minimum income payable during the selected guarantee period.
Survivor income
No survivor benefit
Estimated monthly income that may continue to a surviving spouse or partner.
Income pattern
Level
Shows whether income stays fixed or increases over time.
What this estimate means
With a £1,000,000 lump sum, the model estimates starting income of about £5,304 per month. Level income gives a higher starting payment, but inflation can reduce purchasing power over time. The 10-year guarantee means payments may continue for at least that selected period.
Impact
How your choices affected the payout
Base payout rate at age 65
Older starting ages usually increase payout rates.
6.7%
Pricing basis adjustment
Pricing basis changes the illustrative life expectancy assumption.
x 1.00
Escalation adjustment
Increasing income lowers the starting payment.
x 1.00
Guarantee period adjustment
Longer guarantees usually reduce starting income.
x 0.95
Survivor benefit adjustment
Continuing income to a spouse usually lowers starting income.
x 1.00
Health adjustment
Enhanced annuities may pay more if life expectancy is lower.
x 1.00
Actuarial factor basis
Preset changes the broad illustrative payout assumption.
x 1.00
Final illustrative payout rate
This is a modelled result based on selected assumptions, not an insurer quote.
6.37%
Compare
Compare annuity options
Level income
£5,304
Highest starting income, but buying power may fall with inflation.
3% annual increase
£4,562
Lower starting income, with payments modelled to grow each year.
5% annual increase
£4,031
Lower starting income, but future payments grow faster.
10-year guarantee
£5,304
Income may continue for at least 10 years under the selected model.
50% survivor benefit
£4,880
Part of the income may continue to a surviving spouse or partner.
Inflation-linked estimate
£3,819
Lowest starting income here, with increases linked to the inflation assumption.
Projection
Income projection
This projection shows income only. A life annuity exchanges the lump sum for lifetime income, so the table avoids living-annuity-style capital columns.
| Age | Annual income | Monthly income | Notes |
|---|---|---|---|
| 65 | £63,650 | £5,304 | Level income modelled |
| 70 | £63,650 | £5,304 | Level income modelled |
| 75 | £63,650 | £5,304 | Level income modelled |
| 80 | £63,650 | £5,304 | Level income modelled |
| 85 | £63,650 | £5,304 | Level income modelled |
| 90 | £63,650 | £5,304 | Level income modelled |
| 95 | £63,650 | £5,304 | Level income modelled |
Comparison
Life annuity vs living annuity
Life annuity
A life annuity pays a guaranteed income for life. It reduces longevity and investment risk, but usually gives less flexibility and less access to capital.
Living annuity
A living annuity keeps money invested and withdrawals depend on market performance and drawdown rate. Compare that flexibility with the Living Annuity Calculator.
Guide
What is a life annuity?
Income for life
A life annuity is an insurance product that converts a retirement lump sum into regular income for life.
Guaranteed retirement income
The income is backed by the insurer rather than by your own invested portfolio.
Lump sum exchange
You normally give up access to the capital in exchange for predictable monthly pension income.
Formula
How this calculator estimates income
Adjusted payout rate
base rate x option factorsThe annuity payout rate is adjusted using age, pricing basis, escalation, guarantee period, survivor benefit, health assumptions, and preset basis.
Annual income
annual income = lump sum x adjusted payout rateA R1,000,000 lump sum at a 5.5% payout rate gives R55,000 per year before tax.
Monthly income
monthly income = annual income / 12R55,000 per year is about R4,583 per month before tax.
Factors
What affects life annuity income?
Age
Older starting ages usually increase estimated payout rates because income may be paid for fewer years.
Interest rates
Insurer pricing often changes as market interest rates and bond yields change.
Gender and pricing basis
Gender, joint-life pricing, and underwriting can affect the annuity income estimate.
Guarantee period
A longer guarantee period can lower starting income because payments may continue to beneficiaries.
Escalation rate
Fixed or inflation-linked increases usually reduce the initial monthly pension income.
Fees, tax, and rules
Insurer fees, pricing margin, tax rules, product rules, and country-specific regulation can all change real quotes.
Accuracy
Why real quotes differ
Actual annuity income is customized by insurers and may differ from this educational annuity income estimate. Real pricing can depend on interest rates, age, gender, health underwriting, escalation, guarantee periods, spouse benefit, tax treatment, insurer fees, and product rules.
Example
Life annuity example
A R1,000,000 lump sum at a 5.5% illustrative payout rate gives R55,000 per year, or about R4,583 per month before tax. This is a simple guaranteed annuity calculator example, not a product recommendation.
Disclaimer
Important disclaimer
This calculator provides an educational estimate only. It is not a quote, offer, product recommendation, or financial advice. Real life annuity income depends on insurer pricing, interest rates, health, age, gender, escalation, guarantee periods, survivor benefits, tax rules, and country-specific regulations. Speak with a qualified financial adviser or licensed insurer before buying an annuity.
FAQ
Life annuity questions
A life annuity is an insurance product that converts a lump sum into regular income for life.