COMPARISON · MONEY · RETIREMENT
$100,000 at age 65. A single-premium immediate annuity pays $701 a month — $8,412 a year, guaranteed for life (top carrier life-only quote, October 2026: an 8.41% payout rate). A top 5-year CD at 5.00% pays $5,000 a year and hands your $100,000 back intact. The annuity wins by $3,412 a year for every year you are alive — but on total value the CD stays ahead until age 94.3. This is the income-vs-legacy trade, priced in dollars. Run the four scenarios below.
Enter the lump sum, your age, the annuitant type, and your SPIA quote. The calculator annualizes the SPIA check, prices the CD’s simple interest with the principal preserved, and finds the crossover year — the age at which the annuity’s bigger checks finally overtake the CD’s total value. Then switch the scenario: age 70, joint life, or a 4.75% CD.
Income vs legacy, priced in dollars. The SPIA converts $100,000 into $8,412 a year for life — you cannot outlive it, and you cannot get the $100,000 back. The CD converts the same $100,000 into $5,000 a year and hands the principal back intact — your heirs inherit the full $100,000 plus whatever interest you did not spend. The annuity’s $3,412-a-year edge comes from mortality credits: annuitants who die early subsidize the checks of those who live long — an edge no CD can copy. The CD’s edge is everything the annuity gives up: liquidity, legacy, and the freedom to reinvest at a higher rate later. Default check: $8,412 − $5,000 = $3,412 to the SPIA, every year you are alive — but the CD is ahead on total value until age 94.3.
Setup: $100,000 lump sum, age 65, single male, SPIA $701/mo, top 5-year CD 5.00%, horizon 20 years.
Line 1 — the SPIA. $701 × 12 = $8,412/yr, guaranteed for life. Payout rate: $8,412 ÷ $100,000 = 8.41% — and that is an income rate, not a return: part of every check is your own principal coming back. The insurer invests in conservative bonds; the extra juice is mortality credits.
Line 2 — the CD. $100,000 × 5.00% = $5,000/yr of interest, with the $100,000 principal preserved. Total value after 10 years: $100,000 + $50,000 = $150,000; after 20 years: $200,000. The interest is simple here — paid out each year, not reinvested — because the comparison is income against income.
Line 3 — the gap. $8,412.00 − $5,000.00 = the SPIA wins by $3,412/yr while you are alive. It also pays the premium back to you in 11.9 years — live past 77 and the checks are pure longevity insurance.
Line 4 — the crossover. The SPIA starts $100,000 behind on total value (it has no principal left) and closes the gap at $3,412 a year: $100,000 ÷ $3,412 = 29.3 years, or age 94.3. Before that the CD is ahead on total value — after 10 years the SPIA has paid $84,120 against the CD’s $150,000 (CD ahead $65,880); after 20 years $168,240 against $200,000 (CD ahead $31,760). Live past 94.3 and the SPIA finally pulls ahead on total value too.
Branch — age 70 (SPIA $771/mo): the quote rises to $9,252/yr (9.25%) because the insurer expects fewer checks; against the same 5.00% CD ($5,000) the gap grows to $4,252/yr and the crossover shortens to 23.5 years (age 93.5). Waiting to 70 is the cheapest way to buy a bigger check — if your health cooperates.
Branch — joint life, both 65 ($622/mo): the check falls to $7,464/yr (7.46%) because the guarantee now covers two lives. Against the same CD the gap shrinks to $2,464/yr and the crossover stretches to 40.6 years (age 105.6) — on total value, the joint SPIA almost never catches the CD. The survivor benefit costs about $948/yr versus the single-life quote.
Branch — CD at 4.75%: a Barclays 5-year CD pays $4,750/yr instead of $5,000. The gap grows to $3,662/yr and the crossover shortens to 27.3 years (age 92.3). Every quarter-point the CD loses moves the crossover about two years earlier.
Branch — the spend-down: amortize the CD’s $100,000 over 20 years at 5.00% and it pays $659.96 a month ($7,919.47 a year) — more than the $5,000 of interest alone, because each payment now includes principal. The SPIA still wins by $492.53 a year — and the spend-down leaves zero legacy at year 20, exactly like the SPIA. If you are willing to spend the principal anyway, the SPIA’s edge is only $492.53 a year, not $3,412.
Branch — the error case: set the age to 49 and the calculator refuses — quote data thins below 50 (and above 90). Set the CD rate to 25% and it refuses that too. Pick joint life and set the spouse age to 45 and it asks for a spouse age from 50 to 90.
| Output | Formula | What it means |
|---|---|---|
| SPIA annual income | monthly payout × 12 | $8,412 at the defaults — guaranteed for life, no matter how long you live. |
| SPIA payout rate | annual income ÷ lump sum | 8.41% at the defaults — an income rate, not a yield: it includes return of your own principal. |
| CD annual interest | lump sum × CD rate | $5,000 at the defaults — simple interest, principal preserved and returned intact. |
| Income gap | SPIA annual − CD annual | $3,412/yr to the SPIA at the defaults — every year you are alive. |
| Total-value crossover | lump sum ÷ income gap | 29.3 years (age 94.3) — before that the CD is ahead on total value, after that the SPIA pulls ahead. |
| 10-year totals | SPIA: annual × 10; CD: principal + interest × 10 | $84,120 vs $150,000 — the CD is ahead by $65,880 after 10 years. |
| 20-year totals | SPIA: annual × 20; CD: principal + interest × 20 | $168,240 vs $200,000 — the CD is ahead by $31,760 after 20 years. |
| CD spend-down | PMT(rate ÷ 12, 240 months, lump sum) | $659.96/mo ($7,919.47/yr) over 20 years — the SPIA wins by $492.53/yr but both leave zero legacy. |
SPIA quotes are snapshots from October 2026 — they move with interest rates and vary by carrier, state, and the day you lock (the carrier spread runs about 17% on the same contract; get competing quotes). The two quote sources use different bases: LifeAnnuities.us figures are single life with a 5-year period certain ($693/mo at 65); the $701/$771/$622 figures are top-carrier life-only quotes — mixing the bases is why different pages show different “65-year-old man” numbers. The CD leg uses simple interest paid out yearly with the principal preserved — reinvest the interest and the CD’s total value grows faster (at 5.00% compounded, $100,000 becomes about $162,890 in 10 years). It ignores taxes, early-withdrawal penalties, and the fact that a new 5-year CD locked today may renew at a different rate in five years. Neither leg is inflation-protected; inflation riders exist but cut the starting check 20–30%. One distinction worth stating: a MYGA (multi-year guaranteed annuity) is the CD-like annuity — it pays a guaranteed interest rate for a fixed term and returns your principal at maturity, like a CD issued by an insurer instead of a bank. This page does not compare MYGAs. It compares a SPIA, which gives up the principal entirely in exchange for lifetime income — a different product with a different trade. This is educational math, not retirement or tax advice — annuity contracts are irrevocable, so model before you sign.
Bright Side Kit. "Annuity vs CD Calculator: Income at 65 | Bright Side Kit." https://brightoolbox.com/annuity-vs-cd/ Accessed October 24, 2026.Data sources$701 a month at the top of the market in October 2026 — a life-only quote for a 65-year-old man, or $8,412 a year. The same survey with a 5-year period certain (payments guaranteed for at least five years even if you die) pays $693 a month. The $8 difference is the price of the guarantee, not a disagreement — always compare quotes on the same basis.
No — and the difference is the whole decision. The 8.41% is an income rate: $8,412 a year on $100,000. But part of every check is your own principal coming back — over 11.9 years the SPIA has simply handed you your $100,000 back, one $701 check at a time. The insurer’s actual investment return is near bond yields; the extra over the CD is mortality credits, not magic. Compare the payout rate to a CD yield and you will always pick the annuity; compare it to the CD’s $5,000/yr plus the principal back and you are comparing like with like.
At age 94.3. The SPIA starts $100,000 behind on total value (it has no principal left) and closes the gap at $3,412 a year: $100,000 ÷ $3,412 = 29.3 years. After 10 years the SPIA has paid $84,120 against the CD’s $150,000; after 20 years $168,240 against $200,000. Live past 94.3 and the SPIA finally pulls ahead on total value too — and keeps paying for life after that.
They live in different tax worlds. With a non-qualified SPIA (after-tax money), the IRS applies an exclusion ratio: part of each check is a tax-free return of your own principal until your life expectancy, and only the interest slice is taxed — after life expectancy the checks are fully taxable. Fund it from an IRA and 100% of each check is ordinary income. The CD’s interest is taxed every year it is earned, even if you reinvest it, at ordinary income rates. Neither is a free lunch; run your bracket through both before you decide which tax shape you prefer.
SPIAs are not FDIC-insured — that protection belongs to the CD, which is FDIC-insured up to $250,000 per depositor per bank. Annuities are backed by state guaranty associations, which typically cover around $250,000 in present value of annuity benefits — the cap varies by state, some reach $500,000. Above the cap, split the premium across two or three A-rated carriers to stay inside the limits. This is the one risk the CD never has.
Generally no. Once the free-look window (10–30 days) closes, the decision is irrevocable — unlike a CD, you cannot cash out a SPIA (a CD can be broken early for a penalty, typically months of interest). That is why the crossover matters: the $100,000 is gone as capital. If the idea of zero access terrifies you, add a period-certain option (life + 10 years runs about $674/mo top end vs $701 life-only) or a cash-refund option so heirs recover unspent premium — both shave the check, both buy back a little control.
Almost never all of it. The standard playbook: annuitize enough to cover non-negotiable spending (the gap Social Security and any pension leave), and keep the rest liquid and invested for emergencies, inflation, and legacy — a CD ladder is the natural home for that half. Many retirees split it — 40–50% into the SPIA for the guaranteed floor, the rest into CDs for flexibility. That hybrid is the most common answer in the planner community, and this calculator’s two legs are exactly the two halves of it.
It answers the fairest version of the question: what if you spend the CD’s principal too? Amortizing $100,000 over 20 years at 5.00% pays $659.96 a month ($7,919.47 a year) — much more than the $5,000 of interest alone, because each payment now includes principal. Against that, the SPIA wins by only $492.53 a year, and both leave zero legacy at year 20. If you are willing to spend the principal anyway, the annuity’s true edge is $492.53 a year, not $3,412 — the other $2,919.47 a year is the price of keeping the $100,000.