How Much Annuity Will £100,000 Buy?

A £100,000 pension is a natural round number to test, and the honest answer is that it buys a range rather than a single figure. For a healthy 65-year-old in 2026, a straightforward single-life, level annuity would typically pay somewhere between £6,000 and £7,000 a year for the rest of your life. That is an income of roughly 6% to 7% of the sum you hand over, but every feature you add, and every year of age, shifts the number.

What changes the figure

Four things move an annuity quote more than anything else: your age, your health, whether you protect against inflation, and whether you provide for a partner. A level annuity pays the same amount every year, so it starts higher but loses spending power over time. An inflation-linked (RPI) annuity starts much lower but rises each year. A joint-life annuity keeps paying a percentage to your spouse after you die, which reduces the starting income. Health can push it the other way: an enhanced annuity for a smoker or someone with a medical condition can pay significantly more.

The spread is striking: the same £100,000 can produce anywhere from about £4,300 to £7,400 in the first year depending purely on the shape you choose. None of these is objectively best, a level annuity looks generous at 65 but a 3% inflation rate would roughly halve its real value over 24 years. Our full annuities guide works through when each option earns its keep.

It is worth pausing on inflation, because it is the risk retirees most often underestimate. A level annuity feels comfortable in the first few years, but prices do not stand still. At 3% inflation, £6,500 of income today buys only around £4,800 of goods after 10 years and roughly £3,600 after 20. An RPI-linked annuity starts far lower but climbs each year to protect that buying power, so the two lines eventually cross. Which is right for you depends on how long you expect to live, what other income you hold, and whether you would rather have more now or more certainty later.

Your age at purchase pulls hard in the opposite direction. Because rates rise as you get older, the same £100,000 that buys around £6,500 at 65 might buy closer to £7,300 at 70 or £8,600 at 75. That is why some people cover their essential bills with a modest annuity early on and buy more income later, when both age and, with luck, gilt yields work in their favour. It is rarely an all-or-nothing decision, and blending an annuity with invested drawdown is common.

Take your tax-free cash first

Most people take their 25% tax-free lump sum before buying an annuity. If £100,000 is the amount you use to purchase the income, it may have come from a larger pot of around £133,000, with roughly £33,000 drawn tax-free beforehand. The annuity income itself is then taxable as ordinary income, so it uses up part of your personal allowance alongside your state pension and other income.

Always use the open-market option

You are never obliged to buy your annuity from the provider that holds your pension. The open-market option lets you compare every insurer, and the gap between the best and worst quote is routinely 10% to 20%, a difference that compounds over decades of payments. Disclosing your full health history is essential, because it can only ever improve your rate. Deciding whether an annuity suits you at all, and in what combination with drawdown, is exactly where regulated advice pays for itself.

One more feature is worth knowing about: the guarantee period. Many people worry that if they buy an annuity and die shortly afterwards, the insurer simply keeps the balance. You can guard against that by adding a guaranteed minimum payment period, commonly five or ten years, so that even if you die early, payments continue to your estate or partner until the guarantee ends. Value protection can also return the unused portion of your original capital as a lump sum. Each of these features costs a little income up front, so the question is always how much certainty you want, and for whom, rather than whether £100,000 has a single fixed answer.

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