Is $500,000 Enough to Retire on an Annuity… Or Not Even Close?

Added: 2026-06-01

[00:00:00]Hey there, my name is John Stevenson.

[00:00:01]Welcome to the Guaranteed Retirement Guide Show.

[00:00:04]Today we're going to be talking about whether or not $500,000 is enough to retire on.

[00:00:16]So, you might be thinking, "Well, $500,000, I don't know if that's enough.

[00:00:19]Um I feel like I need like, you know, 1 million, 2 million dollars to actually have a comfortable retirement." And that might be true, but if you plan early enough, uh especially if you put in the right strategy, um it might just be enough. And of course, it depends on what your income goals are, but I'm going to share with you I'm going to share my screen and I'm going to go over some figures with you, and then you can be the judge whether or not $500,000 will be enough. But oftentimes, uh the amount of income that you can produce from $500,000 is a lot higher than than what you might think. So, disclaimer here.

[00:00:52]I sell annuities, okay? I focus on guaranteed income strategies, pension plans using annuity contracts, and I work with over 70 carriers, thousands of products.

[00:01:01]And when people are looking for pension and they're looking for guaranteed income, they usually will reach out to me because their advisor is selling or pitching them one or two options, and then they start looking around they realize there's a lot more out there.

[00:01:13]And so, then they go to my website uh and they start looking at my calculators and they realize, "Yes, there there are other options out there and typically the payouts are much higher than what their advisor's showing them."

[00:01:23]So, if you are interested in purchasing an annuity and you're just trying to research and find out what is best, uh I would invite you to go to my website johnstevenson.com. You will see that I have annuity calculators there. If you're looking for highest income, I would highly recommend the income rider, and you will find that calcu- calculator on there as well. And then of course, the uh the example that I'm going to be going through right now, I'll be using the income rider calculator as well. So, all right, let's dive in. All right, so I've got someone, they're 54, they're in Vermont, they've got $500,000, and they want to retire at age 62. Okay?

[00:01:58]Because that's the age that they're going to take social security and they're like, that's when I want to retire. I want to take social security.

[00:02:03]I want some income for my $500,000. I hope it's enough.

[00:02:07]Um So, we're about to find out. Is it enough? Well, of course it depends on what their income goals are. So, hypothetically, and I haven't even looked at this yet. I just pulled up 500,000 and I pulled it to 62 and I have not scrolled down yet. Um So, what we would be thinking about is just a hypothetical scenario of let's say this person is going to get $30,000 per year in social security income.

[00:02:30]And then let's say they have a goal of $50,000 a year uh additionally. So, we're talk we're talking $80,000 um total income. So, obviously the social security is not going to get them there, but they're hoping that their $500,000 that they're looking to invest into an annuity contract will give them the income that they're looking for. So, they looked at at real estate and they they you know, obviously with real estate you can probably make I don't know, depending on where you live, usually $30,000 a year on a on a half a million dollar house if you can rent it out for 2,500, but you know, sometimes it's yeah, it's a spend more than that. I mean, where I live you got to spend like eight or 900 grand for a house to uh get like 2,500 to 3,000 dollars a month. So, it just depends on on where you live and and of course if you're willing to deal with the maintenance and uh renters and things like that. So, there are other ways to create income from $500,000, but we're we're looking at an annuity contract because we want the highest amount of contractual income that's truly passive and something that we don't have to manage. Okay?

[00:03:31]All right. So, looking at this person and and again, this person is a male.

[00:03:35]It's a single payout, so it will be a higher payout versus a joint and I'll look at that next. But, I'm just I'm just hypothetically, hey, this this person they've got an old 401k, maybe an IRA, maybe they got cash, but they're like they're looking to the future and they're thinking, okay, I need income. I know I I want to I know I want this amount. How can I do this with with a half a million dollars without uh feeling like I got to dive into my savings more or maybe produce more from my brokerage account. All right, so let's see what this is. So, $500,000.

[00:04:06]All right, so here's all the options.

[00:04:09]There's a lot of options. So, I'm going to clean this up here. I'm going to say top annuity per carrier.

[00:04:16]And then I'm going to show you uh talk about these top ones here. So, these top ones, they are temporary, okay? So, Nassau is a very uh they're very well-known for their accelerated income products.

[00:04:28]And so, a lot of times what happens, uh especially when you look at my my calculator, you will see some of these that will pop up. And they do give you higher income for a little while. This one uh gives you income, looks like for like 8 years, which is which is not bad.

[00:04:42]Uh but then, you know, it reduces quite a bit. So, they're giving you giving you 6 grand a month and then reduce it to under 4,000 a month thereafter. So, that's kind of considered for the go-go years, and people want this because a lot of times they are waiting to take social security, but they want to retire early. And so, that might be a good scenario where you can take income more income and then maybe wait to take social security later on or a pension.

[00:05:03]So, that that's it. That is an opportunity for that. Uh but for the most part, when people see this, they're like, "No, I don't want that. I don't want anything that reduces."

[00:05:10]And so, what I'm going to do is I'm going to just filter that out here. So, we can see all the top ones that don't reduce.

[00:05:17]Now, if we look at the the carriers now, Clear Spring is the highest. So, they're giving you a 60 almost $67,000, followed by Equitrust, and then you've got North American, you got Midland. They're sister companies.

[00:05:31]And then you have a Nationwide.

[00:05:33]You got another Nassau product. Um but really, there's a lot of these that will give you, you know, it definitely meet that goal of uh of of an extra 50,000.

[00:05:43]Except you know, in in fact, we're looking at it exceeding it by $16,000, $17,000. Now, if you're looking for an A+ rated company, uh North American's the highest one with $64,783, you're still you're still reaching your goals. I mean, at this point, this person's going to get $94,000 versus the $80,000 they were looking for. So, that's really good. Uh now, what they might think about doing is they're like, "Well, you know what?

[00:06:07]Since I can get that, either one, I won't invest the full 500,000, I'll invest like 450 or 400, you know, just to get that exact number." That's That's always an option.

[00:06:17]Or, they might decide, "Well, I want to retire earlier."

[00:06:22]You know?

[00:06:23]>> [laughter] >> Maybe I don't need the full 80,000 to retire earlier, so then I start bringing it down like, "Hey, I can get $61,000 from Clear Spring if I if I wait till 61." That's pretty good. Uh North American, almost there, 59,000.

[00:06:37]What if What if I decide to retire at 60? Can I do that?

[00:06:42]Absolutely. So, let's see what that payout is.

[00:06:45]All right, so, 55,000 or 53,000. So, I mean, or really 54 grand. So, the real difference is not huge between these two.

[00:06:54]That's pretty substantial. So, you could put the money in, plan for a retirement age of 62 or 65 or whenever. Um but now you know you can retire earlier if you want. I mean, these contracts are totally flexible.

[00:07:08]You can activate income at any time.

[00:07:09]Like, when you're buying an annuity, a lot of people feel like they've got to pick the date. You have to do that with a with a SPIA or a DIA uh or maybe a QLAC, but you don't have to do with an income rider. So, typically, the income rider is more flexible. You can take income whenever you want. And of course, the longer you let it sit, the longer you let it defer, the more income you get. So, but on the flip side, it's kind of nice to get income early and retire early.

[00:07:33]So, this gives you that chance to do that. So, what you could do is you could say, "Well, I do plan on retiring at 62. Obviously, this is going to uh exceed my goal, so I'm in a good spot.

[00:07:46]But, if I do decide to retire at 60, well, I'm still going to exceed that goal by like five grand, right? I'm going to I'm going to Yeah, that's really good. Now, what if What if at 62 I'm like, "You know what? I'm going to wait till 65. I'm really enjoying my job. I thought I would retire, but I really don't want to."

[00:08:02]Well, you can let your annuity contracts continue to grow. You do not have to activate that, remember? You can wait.

[00:08:07]So, I just push this out to 65, the same half million gives you 86,877 with ClearSpring. Pretty good. Um North American still up there, but if you would if you would have purchased that one, maybe that one would have would have been the highest. Obviously, not the highest option if you waited till 65. You know, in hindsight, you might have picked the Nationwide if you wanted an A+, or still Clear ClearSpring's an A-. They're excellent carrier. So, let me show you how this works. So, really what you could do is you could buy this ClearSpring knowing that you're going to have the highest payout either from age 60 to 65 and you're on the top no matter which age you pick. That's kind of nice.

[00:08:45]So, you look here and say, "Okay, how is this working?" Well, I'm giving them $500,000.

[00:08:50]The benefit base is 583,000 at the end of the first year.

[00:08:54]If I were to happen, you know, if I happen to wait till 65, it's going to be 1.259 multiplied by almost a 7% withdrawal rate giving you 86,877.

[00:09:04]That's phenomenal. You look at that and say, "Okay, how is that happening?"

[00:09:07]Well, you're giving it to them for 11 years. So, during those 11 years, they're making money with it, and they're they're also growing your benefit base. And so, for in this case, they're growing at 8% and they'll do it for up to 12 years. Plus, they give you a base bonus of 8%. So, what's happening is they're taking your half a million, they're they're putting a bonus of 8% on it, and then on top of that, they're doing an 8% growth rate compounded every year thereafter. That's why this number grows so big, and that's why a lot of people will look to this as an alternative to leaving their money in the stock market because they're thinking, "Well, if I can get 8% in the stock market, then great. Um but I this is guaranteed. I can get 8% in this guaranteed. And if your sole purpose is to is to produce lifetime income for yourself, this might be the better option, especially if you don't know what what's going to happen in the market in the next 11 years.

[00:09:59]We might have a significant downturn or might have a a big dip right before retirement, and that could change all these numbers if you were to leave your money in the stock market and then purchase an immediate annuity at that time. So, a lot of times it makes sense to put a portion of your money into an annuity contract that gives you a growth rate that's that's high enough to justify it and to to justify taking it out of the stock market because you have this guaranteed growth rate that's pretty high and allows you to have a very nice benefit base, 1.2 million.

[00:10:29]Um multiply by 7% um almost 6.9. Um but it's giving you just a huge amount of income.

[00:10:36]Now, I did promise that I would talk about joint. So, a lot of you that meet with me are married.

[00:10:41]So, we'll look at this. So, we'll say joint.

[00:10:45]And just for simplicity, I'm going to just assume that you're the same age. Obviously, if the if the spouse is a little bit younger, um then that could that could change the numbers a little bit. And even even just being married, even if even if you're the same age, it still does change the numbers because now the insurance company is on the hook for two lives, not just one.

[00:11:03]So, let's see. Is $500,000 enough to retire on? Let's go back to our original goal, right? Age 62.

[00:11:12]We're married, we still need an extra we still need an extra 50 grand a year. So, can we do that?

[00:11:17]Okay, well, here we go. So, ClearSpring is 61,000, almost 62 grand. North American, 60. You're still at your goal.

[00:11:24]It's not as high. It's like $5,000 less than a single payout, but still now this is joint. The reason why joint is important is because when you look at this illustration, let me show you this.

[00:11:35]When you're looking at joint income, you'll notice that the account balance here, see that account balance?

[00:11:42]That's gone by the time you're in your 70s, mid mid to late 70s. But the income never stops. So essentially the way to look at this is you're purchasing a $2 million pension with a half a million dollars. You're doing that for you and your spouse, something that you guys can't outlive. Now you've got your social security, you've got this this pension that you just purchased that you can count on. And so if you want to stay invested in the stock market or you want to do other things with your money, you can and you have that peace of mind knowing that you've got this income. So anyways, it works very very well for people that I meet with who are married, who are looking for that stability, especially for their partner.

[00:12:17]Um when you know, a lot of times um one partner manages all the finances and if something happened to them, the other one wouldn't know what to do to produce the income.

[00:12:26]This makes it really simple. So hope this helps. As you are kind of going through your annuity search and you're looking for the best options, you'll notice that when you have when you have the opportunity to to purchase an annuity and you have the opportunity to lock in a high rate for a long period of time, sometimes it makes sense to do that versus leaving it to risk.

[00:12:47]Uh and of course you've have you have guarantees, you know exactly what it's going to be, there is no surprise and you know what it's going to be if you if you activate it at the at the age that you plan to activate it, but you also know what it is if you plan to activate it early or later. Like there's no surprise. It allows you to really really plan your retirement with a lot more peace of mind. So hope that helps.

[00:13:06]If you enjoy the video, make sure you like, subscribe, share, comment below.

[00:13:10]If you are looking to purchase an annuity, uh I'd be happy to help. There is a link below this video, goes directly to my calendar, we'll get on a Zoom meeting and we'll we'll chat and you can ask me whatever questions you have and of course I'd love to help you if that's what you're looking for. So otherwise, go to my website johnstevenson.com, you can book a call with me there too. And I always encourage people to check out the annuity calculators cuz that will that really does give some clarity and it helps you as you research, knowing that you can find out what is the best out there before having to talk with someone like me and be feel like, you know, feel like you're going to be pitched or sold something. I hate being sold and so I want people to just feel comfortable and know that, you know, if they book a call with me, they know I'm not going to sit here and try to push you into a product cuz I don't care. I'd rather you just see what's available and then, of course, I'll be there to help you if that's something you're looking for. So, anyways, I do appreciate you. I hope you enjoyed the video and we'll see you next time.

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