Annuity calculator Canada

A life annuity is a contract you buy from an insurance company with a lump sum — often from an RRSP or RRIF. In return, the insurer pays you a guaranteed income for life, no matter how long you live or what markets do. It's the closest thing to a personal pension you can buy, trading a pile of capital for certainty. This calculator estimates the monthly income a given purchase amount could buy.

It depends mostly on your age, sex and current interest rates. As a rough guide, a 65-year-old buying a single life annuity with a 10-year guarantee might receive in the ballpark of $550–$650 a month per $100,000 — a payout rate around 7%. Older buyers get more (fewer expected years of payments), and women get slightly less than men because they live longer on average. Enter your own numbers above for an estimate, then get real quotes from several insurers.

An annuity pools risk across many buyers. The insurer spreads your lump sum over your expected remaining lifespan, so the older you are when you buy, the fewer years of payments it expects to make — and the higher each payment. Buying at 70 instead of 65 can lift the monthly income meaningfully. The table above shows how the payout rate climbs with purchase age.

A guarantee (or "term certain") period promises payments for a minimum number of years — commonly 10 or 15 — even if you die early. If you pass away during the guarantee, your beneficiary or estate continues to receive the payments until it ends. It protects against the worst case of buying an annuity and dying soon after, but it slightly lowers your monthly income because the insurer takes on more risk. Life-only (no guarantee) pays the most but leaves nothing if you die early.

An indexed annuity raises your payments each year (by a fixed rate or with inflation) to protect your purchasing power. The trade-off is a much lower starting income — often 25–35% less at the outset than a level annuity. Many retirees instead buy a level annuity for a higher starting income and accept that its real value erodes, or cover inflation with other investments. Use the indexing option above to see the difference.

Annuities trade flexibility for certainty. Once you buy, the decision is usually irreversible — you can't get the lump sum back if you have an emergency. A level annuity's income loses value to inflation over time. And unless you add a guarantee or joint option, there may be nothing left for your estate. They also lock in today's interest rates. For these reasons many retirees annuitize only part of their savings — enough to cover essential spending — and keep the rest invested.

A life annuity often provides a higher guaranteed payout than a 4% safe withdrawal rate because of "mortality credits" — survivors effectively inherit the capital of those who die earlier, something a personal portfolio can't replicate. The catch is you give up access to the capital and any estate value. A common strategy is to annuitize enough to cover the essentials and keep a flexible, invested portfolio for everything else.

Yes. If you buy the annuity with registered money (RRSP/RRIF/LIRA), the entire payment is taxable income, just like a RRIF withdrawal. If you buy with non-registered money, a "prescribed" annuity can spread the taxable portion evenly so only the interest part is taxed, which is more tax-efficient. The estimates here are before tax — budget for the tax bill on top.

No — treat it as an educational estimate. Real annuity quotes depend on each insurer's current rates, their mortality assumptions, your exact birth date, and options like joint-life or return-of-premium. This tool uses a simplified mortality model and a single interest-rate assumption. Always get live quotes from several providers (or a broker) before committing, and consider advice on how much of your savings to annuitize.