Annuity Break-Even Calculator
Is an annuity right for you?
An annuity converts a lump sum into guaranteed lifetime income. But how long do you need to live to “break even” on your investment? This calculator shows you the math and compares annuity income to alternative investments.
Calculate your annuity break-even point
See how long it takes for annuity payments to exceed your initial premium.
Amount you would invest in the annuity
Expected annual return if you invested the premium instead
How annuity break-even works
Break-even point is the age when your total annuity payments equal your initial premium. After this point, you’re “in the money.”
Life-only annuities pay the highest rates because payments stop at death. Period-certain and joint options pay less but offer more protection.
The trade-off: Annuities guarantee income for life (protecting against longevity risk) but you give up access to principal and potential market upside.
Consider your health: If you expect to live longer than average, annuities become more attractive. Family history and current health matter.
Annuity income affects Medicare costs
Annuity payments count as taxable income and factor into your Modified Adjusted Gross Income (MAGI). If your MAGI exceeds certain thresholds, you’ll pay higher Medicare Part B and Part D premiums through IRMAA surcharges.
For example, adding $30,000/year in annuity income could push you into an IRMAA bracket, increasing your Medicare premiums by $1,000+ per year.
Check the IRMAA calculatorTypes of Annuities
SPIA — Single Premium Immediate Annuity
Pay a lump sum, start receiving monthly payments immediately. Highest payout rates but no access to principal. Best for those who need income now.
DIA — Deferred Income Annuity
Pay now, receive income later (often at retirement). Higher payouts than SPIA because of the deferral period. Good for future income planning.
MYGA — Multi-Year Guaranteed Annuity
Like a CD from an insurance company. Fixed interest rate for a set period (3-10 years). Principal is accessible at maturity. Lower returns but more flexibility.
Need help planning retirement income?
Retirement income planning is complex — Social Security timing, annuities, withdrawals, and Medicare costs all interact. Our team can help you understand how the pieces fit.
Get free helpImportant Disclosure
This calculator is for educational purposes only and does not constitute investment, tax, or financial advice. EnrollMedicare.com is not a registered investment advisor, broker-dealer, or financial planner. We do not sell annuities or investment products. Annuity payout rates shown are illustrative estimates based on industry averages and may vary significantly by insurance company, state, health status, and current interest rates. Investment return assumptions are hypothetical and do not guarantee future results. Past performance does not guarantee future returns. Consult a licensed financial professional, tax advisor, or attorney before making any investment or retirement income decisions.