Can You Buy an Annuity at Any Age?

Shawn Plummer

CEO, The Annuity Expert

An annuity is a financial product that can provide you with retirement income. If you are looking for an annuity, this guide will answer the question, “Can I buy an annuity at any age?” There are many different types of annuities, and it’s essential to determine which type suits your needs before investing in one. In addition, to make a sound decision about whether or not to purchase an annuity, it’s essential to understand how they work and its purpose.

Can You Buy an Annuity at Any Age?

Yes, you may invest in an annuity at any age. There are usually few or no lower age restrictions. On the other hand, purchases of annuities do have specific minimum and maximum ages. These limits are different for each annuity type and product.

You might be able to buy an annuity in your child’s name. But most annuities are bought with retirement money because they are more appropriate for near retirement. An annuity is usually bought when people have saved enough in their IRA or other retirement accounts. So, you will see that the age of the person buying an annuity ranges from 40 to 80 years old, depending on what they want to do with it and their needs. You’ll also find retirement savers in their 30s and 40s buying annuities for principal protection, safe growth, or tax-deferred accumulation in addition to retirement accounts.

What Is The Best Age To Buy An Annuity?

The best age to buy an annuity depends on your situation and financial goals. Generally, you are recommended to purchase an annuity when you are close to retirement age and have already taken advantage of pre-tax retirement savings opportunities, such as an IRA or 401(k).

However, buying an annuity at an earlier age may offer fewer benefits than waiting until you are closer to retirement because you would not be able to take advantage of the tax-deferred growth offered by an annuity. Additionally, an annuity purchased earlier could potentially have more associated fees. Therefore, it is essential to consider your individual retirement goals and needs when deciding when to purchase an annuity.

Age Limits For Annuities

With three sorts of fixed-type annuitins: immediate annuities, fixed index annuities, and multi-year guarantee annuities. Here’s a brief overview of each type and some potential limits:

Immediate Annuities

Many insurance firms will allow you to purchase an immediate annuity until you reach age 100. Many individuals who acquire immediate annuities fall within the age range of 70 to 80. Because the payout is based more on actuarial predictions of life expectancy at that age, the older someone is when they buy an immediate annuity, the greater their monthly payment will be from the annuity company.

Warning: Annuitized payments can’t be converted back into a lump-sum payment after annuitized.

Fixed Index Annuities

The minimum and maximum age restrictions for fixed index annuities vary. A fixed index annuity may be purchased until you are 90 years old. The typical age restriction is around 80. Many insurance companies will not allow you to purchase an annuity with an income rider until you are 50 or older.

Warning: If you withdraw money from a fixed index annuity contract before you are 59.5 years old, you will have to pay taxes and a 10% early withdrawal penalty.

Multi-Year Guarantee Annuities

You generally can buy a multi-year guarantee annuity or fixed annuity until you are 90 years old. However, many purchasers of multi-year guarantee annuities are in their 50s to seventies, as with other deferred annuities.

Best Age To Buy An Annuity

So, when is the best age to invest in an annuity? It’s debatable. Many people buy annuities for security reasons. Others acquire them for a particular income over a period of time or throughout their lives. On the other hand, some people are drawn to annuities for various motives, such as having another tax-deferred “bucket” to accumulate retirement money alongside retirement accounts.

Although no one-size-fits-all solution exists, most annuity purchasers are in their fifties, sixties, and seventies. Some of the reasons why different age groups buy include:

  • People in their 30s and 40s are often cautious. They want something safe for their savings to grow. They might use an annuity to help them save money.
  • In their 50s and 60s, people buy an annuity for different reasons. Some want to save money before they retire. Others find it helpful to have a guaranteed income for the rest of their lives. Others want a safe growth vehicle where they can use their money as income in the future.
  • Buyers in their 70s tend to buy annuities for income, estate planning, or long-term care.

Next Steps

Now that you understand more about annuities and how they work, you may wonder if one is right for your retirement savings plan. Ultimately, purchasing an annuity depends on many factors, including age, income, goals, and risk tolerance. If you’re still unsure whether an annuity makes sense for you, our team of experts can help. We’ll consider your unique circumstances and provide you with a personalized quote. Contact us today to get started.

Can You Buy An Annuity At Any Age?

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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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