Updated: Oct 20
In the past, the industry consensus for the best time to buy an annuity was between the ages of 50 and 65. The reason for this age range was due to the fact that most annuity products typically had an accumulation period of 10 years, which then allowed for someone who was 50 years-old to start receiving annuity payments right as they passed the IRS withdrawal threshold of age 59 ½. At the other end of the optimal purchasing range, age 65 was the upper limit simply because it was just not feasible for someone any older to have to wait 10 years before receiving payments.
Nowadays, annuities are much more flexible and reasonable in their design, which allows for an even wider optimal purchasing age range. Someone as young as 40 years old, with a much longer wealth accumulation period of over 20 years, can now purchase an annuity and enjoy quite a sizable lifetime income at retirement. Newer annuity products have accumulation periods of less than 10 years or may even offer immediate withdrawals, which now opens the door even to people over 70 years old to utilize an annuity for lifetime income. So in terms of the best age range, anyone between the ages of 40 and 75 now can purchase an annuity that is right for them.
For most retirees or people who have changed jobs recently, the typical route would be to transfer funds from a 401(k) or 403(b) type account to an Individual Retirement Account (IRA) at a bank or brokerage. As an additional option, consider investing an IRA annuity, which features the lifetime income benefits of an annuity, while the funds grow tax-deferred as an IRA.
Then there are those who are more concerned about estate planning and transferring wealth to the next generation. Life insurance is one of the vehicles that does that well, but even if one cannot qualify for an insurance policy, some annuity contracts can be a good alternative for passing on wealth. And as stated, the best part is that an annuity is now available even to in the 75-80 age range.
In summary, annuities are very different now compared to what they were. It is no longer a financial solution reserved only for the elderly, but can be available to any young person who is looking for the security of a retirement income that last for a lifetime. If you’re interested in finding out more about annuities, our team of experts are here to help design a retirement plan that’s just right for you.
The referral of your friends and family is the greatest compliment you can give me. Thank you! 🤝🤝
Feel free to reach me the numbers below, or email me with any additional questions.
Real Estate/Insurance/Annuity Consultant
Irvine: (949) 656-9135
Diamond Bar: (909) 979-3566