Buy An Annuity At Age 40: Should I Do It?

Shawn Plummer

CEO, The Annuity Expert

As we traverse the unpredictable terrain of life, there’s one constant we all anticipate—retirement. While retirement might seem like a distant reality for a 40-year-old, it is the ideal time to begin securing your financial future, with an annuity as a worthy consideration. Not your everyday investment, annuities offer long-term income potential that can bolster your golden years. But why, you may ask, should I buy an annuity at age 40? Let’s delve in and explore.

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Understanding Annuities

What is an Annuity?

An annuity is essentially a contract between you and an insurance company. You pay a lump sum or a series of premiums. In return, the company promises to make periodic payments (in a lump sum or a series of payments) to you immediately or at a specified date. Think of it as a long-term investment designed to help protect you from the risk of outliving your income.

Types of Annuities

There are two main types of annuities: immediate and deferred. With immediate annuities, the payouts start immediately. On the other hand, deferred annuities begin accumulating savings over time and only start paying out at a predetermined date, generally during retirement.

Should I Buy An Annuity At Age 40?

The Value of Annuities at 40

An Early Start to a Secure Retirement

Initiating an annuity at 40 gives it ample time to grow, increasing your financial security when retirement comes knocking. For instance, a deferred annuity could accumulate substantial growth over a 20 or 30-year span, providing a significant income stream in retirement.

Annuities as a Stability Anchor

With their predictable income, annuities can act as a stability anchor amidst the stormy seas of market volatility. At 40, your risk tolerance might still be high, but adding an annuity to your portfolio can balance riskier investments.

Contractually Guaranteeing Your Retirement Income In The Future

Buying an annuity at age 40 allows for more years of growth before retirement. This means a lower initial investment can accumulate into a significant payout, providing a higher guaranteed income during retirement. This early investment strategy essentially leverages the power of compound interest over a longer time frame, ensuring you reap more significant benefits from a smaller amount of savings.

Why Would I Buy An Annuity At Age 40?

Should I Buy An Annuity At Age 40?

How Much Income Can I Expect If I Buy An Annuity At Age 40?

If you’re 40 and want an idea of the income you could receive for life starting at age 60, 65, and 70, below is the amount needed to fund an annuity today (at age 40) and guarantee your desired retirement income.

Retirement Age$25,000/yr.$50,000/yr.$75,000/yr.$100,000/yr.
Age 60$161,223$322,446$483,670$644,893
Age 65$132,264$264,527$396,791$529,055
Age 70$94,015$188,029$282,044$376,058

Evaluating the Decision

Consider Your Financial Goals

Your decision to buy an annuity should align with your long-term financial goals. If a steady income stream during retirement is a high priority for you, starting an annuity at 40 could be a savvy move.

Understand the Costs

While annuities can provide significant benefits, they can also be costly. Understanding the fees associated with your chosen annuity, like management and surrender charges.

Buy Annuity At 40

Do I Buy An Annuity At Age 40? The Next Steps

An annuity may be the answer if you’re looking for a guarantee of future income in retirement while minimizing taxes. Request a quote today to see how much money you could receive each month for the rest of your life. You can also keep up with inflation throughout your retirement, protect your principal from stock market crashes, and even roll over old IRAs and 401ks into this investment vehicle. With so many benefits available, it’s worth determining if purchasing an annuity at age 40 is the right choice.

Buy An Annuity At Age 40

Find out If You Should Buy An Annuity At Age 40

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Frequently Asked Questions

Can I buy an annuity at 40?

Yes. Consumers can buy an annuity at age 40. Most annuities have no minimum age limitations.

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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