How Much Should You REALLY Put Into an Annuity?

If you’re thinking about buying an annuity, one of the biggest questions is simple—but critical:

How much money should you actually put into it?

Some advisors say “only a little.”

Others say “as much as possible.”

The truth? There’s a right range—and going too far can backfire. Let’s break it down in plain English.

Need help choosing the best annuity for your unique situation? Have questions about getting an annuity? If so, it’s best to speak with an annuity specialist. Watch this short video to see how I can help you do this (at no cost to you!)

Tip: See how much an annuity could pay you using our annuity calculator.

Why Putting Too Much Into an Annuity Can Be a Problem

Annuities are designed to provide guaranteed income and protection, not to hold all your money.

Insurance companies actually limit how much you can put in.

Why?

They want to make sure you still have liquid money available for emergencies and flexibility.

💡 Pro Tip: If you try to put too much into an annuity, your application can be rejected by the carrier.

The General Rule of Thumb (Most People Don’t Know This)

Here’s what typically works:

• 30%–50% of total assets → Most common recommendation
  
• Up to 75%–80% max → High end (rare, case-by-case)

Anything above that usually raises red flags.

👉 The goal is not to stuff money into an annuity.

👉 The goal is to use only what you need to solve your income problem.

What Actually Determines the “Right” Amount?

It comes down to three things:

1. How much income do you need every month?
   
2. How much of your money do you want protected from market risk?
   
3. How much liquidity do you need outside the annuity?

For example:

• If you want guaranteed lifetime income → annuities shine
  
• If you want market growth for heirs → keep money outside

👉 Want help figuring that balance out? Schedule a call here and I’ll walk you through it.

Example: Someone With $500,000 Total Assets

Let’s keep this practical.

If you have $500,000 total:

• You should usually keep $80,000–$100,000 outside the annuity
  
• That leaves $400,000–$420,000 available for annuities

Why?

Because annuities have surrender schedules, and you don’t want to touch them early if an emergency pops up.

Example: Buying an Annuity for Income (Not Growth)

An income annuity is basically a personal pension.

You’re not trying to beat the market.

You’re buying guaranteed paychecks for life.

For example:

• $1,000,000 deposited
  
• Income starts at age 71 (after 5-year deferral)
  
• Joint lifetime income
  
• Income never decreases

That can generate over $114,000 per year for life, depending on timing and carrier.

👉 This is why wealthy retirees love annuities for income—and keep the rest invested for growth.

Accelerated Income Options (Good for Bridging Gaps)

Some annuities offer higher income upfront, then reduce later.

These can be useful if you:

• Want to retire early
  
• Are delaying Social Security
  
• Have a pension starting later

⚠️ Most people skip these because income eventually drops—but they can be powerful bridge strategies.

What If You Only Need a Specific Monthly Amount?

This is where annuities really shine.

Let’s say you only need $3,300 per month to close your income gap.

Instead of guessing, we can reverse engineer the solution.

Example:

• Monthly income needed: $3,300
  
• Annual income: $39,600
  
• Required annuity deposit: ~$532,000

Now imagine you had $850,000 total:

• $532,000 creates guaranteed lifetime income
  
• ~$320,000 stays invested and growing

💡 That’s how you get income + growth without stress.

👉 You can run these exact numbers yourself using my calculators.

Why Deferring Income Matters (But Isn’t Always Required)

• The longer you defer income → the higher the payout
  
• But even starting income immediately can work well

For example:

• Start income at 66
  
• $1,000,000 deposit
  
• Generates ~$74,000 per year immediately

That’s about $6,200 per month, guaranteed for life.

The Real Answer: Use Only What You Need

This is the key takeaway:

👉 You don’t need to put all your money into an annuity.

👉 You only need to put in enough to solve your income problem.

Some people buy one annuity.

Others stack multiple income streams.

Both can be right—if it fits your plan.

Conclusion

Annuities aren’t about betting everything.

They’re about locking in certainty where it matters most.

Need help with finding the best annuity for your retirement?

Click here to schedule a call with me.

On the call, I can help you:

• Determine what type of annuity is best for you
• Find the highest paying annuities for your unique situation
• Answer any other questions you may have

FAQs