Planning for retirement involves a multitude of decisions, including how much to save, which investments to choose, and when to start withdrawing. Annuities are among the most popular tools for generating predictable income in retirement, often with features like tax-deferred growth and guaranteed payouts. 

The best age to buy an annuity depends on your financial goals, income needs, and retirement timeline, so it varies for each individual. Read on to explore how age affects payouts and what to consider as you evaluate your options. This is not meant to be a recommendation for your situation but a general overview of buying an annuity at different ages. Please review your financial situation and talk with the appropriate professionals before making any decisions. 

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When is the best time to buy an annuity?

There’s no universally perfect age to buy an annuity, but the timing can have a significant impact on how your annuity supports your retirement goals. For instance, you can buy an annuity at age 30 or 40, which may provide tax-deferred growth and the potential for higher payouts later. But it’s also possible to buy as late as your 60s or 70s. If you’re deciding when to buy an annuity, consider the following key factors.

Retirement age

Your planned retirement age plays a major role in timing any annuity purchase. If you expect to retire early or want to build a strong income foundation well in advance, buying an annuity in your 30s or 40s may give your money time to grow. Those planning to work into their late 60s or beyond might prefer to hold off until they have a clearer picture of income needs and timeline. Generally speaking, you would look to purchase an annuity if you were nearing retirement age, looking for a risk-averse product, or seeking guaranteed growth that could outpace inflation. With a longer time horizon until retirement, you may seek out more risky retirement strategies with higher growth potential, like investing in stocks or mutual funds. As you approach retirement and can no longer weather a market downturn, you could then look into an annuity for the guarantees it can provide. 

Income needs

If you want to create a reliable future income stream and don’t need immediate payouts, buying earlier can give you more time to build value. As you near retirement, you may notice an income gap that Social Security can’t fill and buy one in your 60s to bridge the gap in your income needs. 

Risk tolerance

Risk tolerance can influence whether you want to lock in income early or stay invested longer. If you’re more risk-averse, you may consider buying an annuity earlier to secure future income. For those who are comfortable with some risk, a variable annuity can provide higher growth potential while you still have time to recover from market downturns. Later in life, a fixed annuity can be a more predictable option that can provide peace of mind.

Access to other retirement income

You may already have a well-funded 401(k), IRA, or pension in place. In this instance, you could choose to purchase an annuity to supplement your other resources. If your retirement income strategy is lacking stability and peace of mind, an annuity can help ensure you have a guaranteed income when you need it most. 

Can you buy an annuity at any age?

While most contracts require an age minimum of 18 to purchase, there is generally an upper age limit of 80 to 90 years old, depending on the annuity. When it comes to the best age to buy one, that depends on your financial goals and strategy. You might consider not buying an annuity if:

• You have short-term liquidity needs: Annuities facilitate long-term growth and income. Early withdrawals often incur surrender charges, making annuities unsuitable for emergency funds or short-term savings goals.
• You’re at a very advanced age: Immediate annuities can provide a higher payout at older ages due to a shorter life expectancy. If you have severe health issues or a significantly reduced life expectancy, however, the total payout might not justify the initial premium due to a limited benefit period. 
• You have a longer time horizon and seek more growth potential: With a longer time horizon until retirement or when you need access to the funds, you may seek out more risky retirement strategies with higher growth potential like investing in stocks or mutual funds. As you approach retirement and can no longer weather a market downturn you then could look into an annuity for the guarantees it can provide.

Comparing annuity strategies by age group

Different ages require different financial tactics and considerations. While individual circumstances may vary, here’s a breakdown of how annuities can fit into your strategy at different stages of life.

Age 30–40

• Focus on long-term consistent growth with a deferred annuity, taking advantage of tax-deferred compounding over multiple decades. 
• Consider a variable annuity if you’re comfortable with market exposure for higher growth potential.
• Lock in guaranteed income riders at a potentially lower cost. 

Age 40–50

• Continue building a consistent retirement income with deferred annuities.
• Consider a fixed index annuity for moderate growth with downside protection.

Age 50–60

• If retirement is nearing, consider a deferred fixed annuity to preserve capital and grow income.
• For those behind on retirement savings, consider a deferred variable annuity with growth potential to help close the gap. 
• Consider an income-focused rider and review options for guaranteed lifetime income.

Age 60–70

• Consider an immediate annuity to begin generating income.
• Explore qualified longevity annuity contracts for income later in retirement.
• For those with other assets, you could focus on fixed annuities for stability and peace of mind.

Age 70+

• Consider prioritizing income stability — immediate fixed annuities could be suitable.
• For those with a long life expectancy, longevity annuities can provide guaranteed income later in retirement. 

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What is the “annuity age 75 rule” and does it matter?

There’s a misconception that you must purchase an annuity by age 75. In reality, no legal rule requires you to buy an annuity before that age. This belief likely stems from two factors:

• Insurer age limits: Many insurance companies set their own age caps for annuity purchases — often around 75 to 85 — because issuing contracts to older individuals can increase their risk. This can limit your options or affect pricing if you wait too long.
• Required minimum distributions (RMDs): Starting at age 73 or 75 (depending on your birth year), the IRS requires withdrawals from certain retirement accounts, such as traditional IRAs or 401(k)s. The RMD rules don’t apply directly to annuities unless held in a tax-qualified account. For non-qualified annuities, which are funded with after-tax dollars, the RMD rules do not apply. These rules may however, influence how and when you use annuities for income.

So, while you can purchase an annuity after age 75, your options may narrow, and your financial priorities may shift. It may be wise to explore annuities earlier if you want the broadest range of products and payout structures. 

Explore your annuity options with Gainbridge

Whether you're a professional focused on tax-deferred growth or nearing retirement and seeking guaranteed income, annuities can provide diverse solutions to fit your needs. Gainbridge offers innovative annuity products designed for flexibility and security, helping you build a customized retirement strategy. 

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To find the right annuity option for you, visit Gainbridge today. 

This article is intended for informational purposes only. It is not intended to provide, and should not be interpreted as, individualized investment, legal, or tax advice. For advice concerning your own situation please contact the appropriate professional. The GainbridgeⓇ digital platform provides informational and educational resources intended only for self-directed purposes.