Which Annuities Pay the Highest Income Right Now

Annuity payouts change with interest rates, so the highest-paying option shifts month to month

The annuity paying the most income this month depends on current interest rates, your age, and the type of annuity you choose. When interest rates rise, insurance companies can afford to pay higher monthly amounts because they earn more on the money you give them. When rates fall, payouts fall too. There is no single "highest-paying annuity" that stays on top — what pays best in January may not pay best in March.

The main factor that changes your payout is your age at purchase. A 75-year-old buying a single-life when ready annuity will receive a higher monthly payment than a 65-year-old buying the same type of annuity, because the insurance company expects to pay for fewer years. A 55-year-old will receive the lowest payment of the three.

To find what pays highest right now, you compare quotes from multiple insurance companies on the same day, using the same details about yourself — your age, the amount you are investing, and the type of annuity. The quotes will differ, sometimes by several hundred dollars per month on a $100,000 investment.

Key Takeaways

• Single-life when ready annuities typically pay more per month than joint-life or period-certain annuities because the insurance company takes on less risk.
• Your age at purchase is the strongest factor in your monthly payment — older buyers receive higher payments for the same investment amount.
• Interest rates affect all annuity payouts; when the Federal Reserve raises rates, new annuity quotes rise within weeks.
• Comparing quotes from at least three insurance companies on the same day shows you the real range of what is available right now.
• when ready annuities pay more than deferred annuities because you start receiving income right away rather than waiting years to begin.

How interest rates move annuity payouts up and down

Insurance companies invest the money you give them in bonds and other fixed-income securities. When those investments pay higher returns, the company can afford to pay you more each month and still make a profit. When returns fall, your payout falls too.

The 10-year Treasury bond yield is the benchmark most annuity companies watch. In late 2021, that yield was around 1.5 percent. By mid-2023, it had risen to over 4 percent. During that same period, when ready annuity payouts increased by roughly 40 to 50 percent across the industry. A person who would have received $400 per month on a $100,000 investment in 2021 might receive $600 per month in 2023 for the same investment.

This means the timing of your annuity purchase matters. If you are considering buying an annuity, checking quotes when rates are higher will show you higher potential income. Rates can shift in either direction, and there is no way to predict where they will go next.

when ready annuities pay more than deferred annuities

An when ready annuity begins paying you within 30 days of purchase. A deferred annuity waits years or decades before payments start. when ready annuities pay significantly more per month because the insurance company starts paying out sooner and has less time to invest your money.

For example, a 70-year-old investing $200,000 in an when ready annuity might receive $1,100 to $1,200 per month for life, depending on the insurance company and current rates. The same person buying a deferred annuity that starts payments at age 80 would receive a much smaller monthly amount — perhaps $600 to $700 — because the company has 10 years to grow the investment before it begins paying out.

If you need income now, when ready annuities are the only option that produces it. If you do not need income for several years, a deferred annuity may offer other features, such as growth potential or death benefits, that matter more to you than maximum monthly income.

Single-life annuities pay more than joint-life or period-certain options

A single-life annuity pays you for as long as you live, then stops. A joint-life annuity continues paying a surviving spouse or beneficiary after you die. A period-certain annuity guarantees payments for a set number of years (often 10 or 20), whether you live that long or not.

Single-life annuities pay the most per month because the insurance company takes on the least risk. If you live to 95, the company keeps paying. If you die at 75, the company stops. With a joint-life annuity, the company may have to pay your spouse for another 20 or 30 years, so monthly payments are lower. With a period-certain option, the company must pay for the full period regardless of whether you are alive, so that also reduces the monthly amount.

A 72-year-old investing $150,000 might receive roughly $750 per month from a single-life annuity, $650 per month from a joint-life annuity (with spouse as beneficiary), or $700 per month from a 20-year period-certain annuity. The exact amounts depend on the insurance company and current interest rates.

Variable annuities and indexed annuities have different payout structures

Fixed annuities pay a may provide dollar amount each month. Variable annuities tie your payment to the performance of investment accounts you choose. Indexed annuities link your payment to a market index like the S&P 500, with a may provide minimum.

Fixed when ready annuities produce the highest may provide income because the amount is locked in and does not change. Variable and indexed annuities may pay more in months when markets perform well, but they may also pay less. If you are looking for the highest income right now, a fixed when ready annuity will show you the exact number before you buy.

Variable and indexed annuities are more complex and often carry higher fees. They may appeal to someone who wants growth potential or inflation protection, but they do not produce the highest baseline income payment.

How to compare annuity quotes to find the highest payout

Get quotes from at least three insurance companies on the same day using identical information: your age, the amount you are investing, your gender (companies use this in calculations), and the type of annuity you want. Use an online annuity quote tool or contact insurance companies directly.

Write down the monthly payment amount, the insurance company name, and the date. Rates change frequently, so quotes from different days are not comparable. The highest quote on Monday may not be the highest on Wednesday.

Check the insurance company's financial strength rating through agencies like A.M. Best, Moody's, or Standard & Poor's. A slightly lower payout from a company with a stronger rating may be worth the trade-off, because you are depending on that company to pay you for decades.

Ask whether the quote includes any fees, riders, or optional features. Some quotes show the base payment; others include add-ons that reduce the monthly amount. Make sure you are comparing the same thing across all three quotes.

Age, gender, and health status affect your payout

Insurance companies use actuarial tables to estimate how long you will live. Older age means a higher monthly payment. Male applicants typically receive higher payments than female applicants at the same age, because men have a shorter average life expectancy in the company's tables.

Some annuity companies offer impaired-life annuities or enhanced annuities for people with serious health conditions. If you have a condition that reduces your life expectancy, you may receive a higher monthly payment than someone your age without that condition. You will need to provide medical records or undergo underwriting for the company to consider this.

Your health status does not affect the quote you receive online. You only disclose it if you want to ask about an enhanced annuity option.

Frequently Asked Questions

Do annuity rates change daily?

Yes. Insurance companies update their rates based on bond market movements, which happen every trading day. A quote you receive on Monday may be different on Tuesday. If you are serious about buying, get fresh quotes on the day you plan to purchase.

Can I lock in a rate before I buy?

Some insurance companies will hold a quote for 30 to 60 days, but this varies by company and is not may provide. Ask the company directly whether they offer a rate hold and for how long. Most do not.

What if I want income to increase over time?

You can choose an annuity with a cost-of-living adjustment (COLA), which increases your payment by a set percentage each year. This reduces your starting payment because the company is committing to higher payouts later. A COLA rider typically reduces your first-year payment by 15 to 25 percent.

Is the highest-paying annuity always the best choice?

Not necessarily. The highest payment may come from a company with weaker financial strength, or it may require you to give up features you need, like a death benefit or survivor payments. Compare the full picture — company strength, features, and payment amount — not just the dollar amount.

What happens to my money if the insurance company fails?

Each state has a guaranty fund that protects annuity holders if an insurance company becomes insolvent. Coverage limits vary by state but typically range from $100,000 to $500,000 per person per company. Check your state's guaranty fund rules if you are concerned about a particular company.