What Is the Best Age to Buy an Annuity?

The idea of one perfect age to convert your pension pot into a guaranteed income is one of retirement planning’s most enduring myths. In practice the right moment depends on your health, the rest of your income, the interest rates available on the day, and how much certainty you want. What is reliably true is that annuity rates improve as you get older: an insurer paying a 70-year-old expects to make fewer payments than one paying a 60-year-old, so it can afford a higher annual amount for every pound you hand over.

Why older buyers get more income

An annuity is priced on life expectancy. At 65 a healthy person might reasonably expect two decades or more of payments; by 75 that horizon is shorter, so the insurer spreads your capital over fewer expected years and the headline rate climbs. As a rough guide, rates tend to rise by around 3% to 5% for each year you defer through your late 60s and early 70s, and the increases can be sharper after 75. Waiting also leaves your pot invested for longer, which may grow it, though investments can fall as well as rise, so that upside is never guaranteed.

There is a second force at work alongside your age, and it is entirely outside your control: interest rates. Annuity rates are underpinned by the yield on government bonds, or gilts, because that is largely what insurers buy to back the promises they make you. When gilt yields are high, annuity rates are generous; when they fall, so does the income your pot will buy. This is why two people of exactly the same age and health can be offered very different deals a year apart, and why timing the market for annuities is so difficult, nobody can reliably forecast where rates will sit when you are ready to buy.

These figures are illustrative for 2026 and vary widely by provider, health and the options you choose. They assume a level income with no spouse’s pension and no inflation protection; adding either lowers the starting figure. Our guide to how annuities work breaks down each of these choices in detail.

The case for buying earlier

Buying younger is not simply a worse deal. An annuity purchased at 65 pays for more years in total, and it hands you certainty at the very start of retirement: the years when running out of money would do the most damage. Securing your essential bills with a guaranteed income early on removes the risk that a poor run of investment returns in your first decade forces you to cut back permanently. It also buys peace of mind, which for many people is the whole point of an annuity in the first place.

The case for waiting, and the role of health

Delaying means a higher rate, more time for the rest of your pot to grow, and the chance to lock in an income once you have a clearer picture of your spending. Health matters enormously here: if you smoke, are overweight, or have a condition such as diabetes or heart disease, you may qualify for an enhanced annuity paying materially more, sometimes 20% to 40% above standard rates. Always disclose your health and shop the whole market, because the difference between the best and worst quote can dwarf any timing decision.

You do not have to decide all at once

One of the biggest misconceptions is that annuitising is a single, irreversible switch. It rarely needs to be. Phased annuitisation lets you buy an annuity in stages, securing enough guaranteed income to cover essentials now, then converting more of your pot later as rates rise with age. The remainder can stay invested in a drawdown plan, giving you flexibility and growth potential alongside security.

There is no substitute for advice tailored to your circumstances here, the decision interacts with your tax position, your partner’s pensions and your attitude to risk. This is information, not personal advice. Vetted Wealth can match you, free of charge, with an independently vetted, FCA-regulated adviser who specialises in retirement planning.

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