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Is my annuity payout too good to be true?

I have an old annuity that should have a $50,000 balance when I'm 60 years old. The various calculators on the net usually say a payout of over 5 years (not for life) would be around $800 per month. That assumes 4% interest. This seems too good to be true. I know that much depends on the contract and other variables, but in general, does the $800 plus a month seem an accurate figure?

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October 2017

12 x $800 = $9600.

$9600/50,000 == < 20%

There's no reason something worth $50,000 couldn't pay out $9600 each year for 5 years.  You could stick $50,000 in an FDIC insured bank savings account, earning less than 1% and pull out more than $10,000/yr.

In fact, if the numbers you've posted are correct, you're earning not only less than 4% interest (over those five years) but actually *losing* money over those 5 years.

If they're projecting the 4% growth between *now* and when you're 60 -- presumably a long way off -- that's not a terribly surprising figure.  You can investment grade bonds which yield around that right now.  Just for reference, a certain long-term corporate bond index fund -- with a duration of around 14 years and an average (current) bond maturity (within the diversified portfolio) of around 24 years -- is showing a current SEC yield of over 4%.

As you said, there are a lot more factors here - what are the terms of the contract, does it have other payout options, etc. etc.  As well as issues about yourself -- how old are you now, how long a way off is 60, and how much are you putting in now (or are you putting in the money a bit at a time over many years), etc. etc.

So - no - with what little you've given - those numbers don't look terribly surprising at all.  If you have any concerns, contact the annuity company and/or the person who sold it to you and ask for more clarity and illustrations of how they come up with the numbers.

October 2017
October 2017
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October 2017