Is Buying an Annuity at Age 70 a Smart Retirement Strategy?

Annuities have gained attention as a tool for securing predictable retirement income, especially important as traditional pensions become less prevalent and economic uncertainties increase. Retirees around age 70 consider annuities to lock in guaranteed lifetime monthly payments in exchange for a lump sum, supplementing Social Security and investment income.

Purchasing an annuity at age 70 can yield higher monthly payouts compared to buying earlier, due to actuarial factors and remaining life expectancy. This makes immediate annuities especially attractive now given relatively high interest rates, boosting fixed annuity returns. However, annuities often include drawbacks such as limited liquidity, substantial fees, and potential challenges in leaving a financial legacy to heirs. Individuals with health issues or those who have other stable income sources may find annuities less beneficial.

Deferred annuities may be better suited for younger buyers, allowing tax-deferred growth over time before income payouts begin. Financial advisors generally recommend immediate annuities between ages 70 and 75, when retirees have a clearer picture of their income needs and can maximize payments while longevity insurance remains valuable. Overall, deciding to purchase an annuity at age 70 depends on health, financial goals, family longevity, and existing income streams. Comparing annuity products and understanding associated costs and trade-offs is critical to ensuring the product aligns with retirement income strategies. For some retirees, annuities can offer significant peace of mind by providing a stable income stream during retirement’s unknowns.