If you’re in your 50s or 60s and starting to think seriously about retirement, one of the questions you’ve likely considered is, “When should I buy an annuity?”

This is a critical topic—especially if your goal is to replace your paycheck, stop worrying about running out of money, and create a financially secure retirement you love.

After helping thousands of individuals and couples over the past 35+ years, I can confidently say:

Buying an annuity at the right time can be a game-changer in your retirement plan.

But how do you know when that time is? And how do you choose the right type of annuity?

Let’s walk through the key factors, common mistakes, and proven strategies to help you decide if and when buying an annuity is the right move for you.

What Is an Annuity?

An annuity is a contract between you and an insurance company. In exchange for a lump sum or a series of payments, the insurer guarantees to provide regular income—either immediately or in the future.

Annuities aren’t about chasing returns; they’re about creating reliable, guaranteed income.

A consistent check will arrive every month for your life, regardless of what the market or economy does.

The Real Question Isn’t Just “What Is an Annuity?”, It’s “When Should I Buy an Annuity?”

There’s no one-size-fits-all answer. Your decision will depend on your:

• Age and retirement timeline
• Health and family longevity
• Monthly income needs
• Existing income sources (Social Security, pensions, investments)
• Risk tolerance and desire for guaranteed income

5 Timing Windows for Buying an Annuity

1. The Pre-Retirement Window: 5–10 Years Before Retirement

If you’re within 5–10 years of retiring, this is an ideal time to purchase a deferred income annuity or fixed indexed annuity with an income rider.

This approach allows you to:

• Guarantee rates on the rollup of your money
• Accumulate higher future payouts
• Lock in income before you need it
• Reduce retirement risk while preserving growth potential

Many clients in their mid-to-late 50s begin layering in annuities now so they have income streams ready when they stop working.

2. At the Time of Retirement

If you’re retiring today or within the next year or two, an income-generating fixed indexed annuity or a single premium immediate annuity (SPIA) may be the best choice. Always consider your potential need for access to the principal.

This is often the go-to choice for:

• Covering “need-based” monthly expenses
• Creating a personal pension
• Avoiding market risk during critical early retirement years

3. After Your Peak Earning Years

If you’ve maximized your 401(k) and Roth IRA contributions and are in your peak earning years (usually age 55–65), consider using a portion of your taxable savings to purchase an annuity or a RILA, depending on your goals and objectives.

Always check with a qualified advisor before making any decisions. Click here to get support.

This provides:

• Tax-deferred growth
• Income later in retirement
• Reduced taxable investment income now

4. When Markets Are High and You Want to Lock in Gains

If your investment portfolio has performed well and you’re feeling uncertain about market volatility, using a portion of your gains to purchase guaranteed income or protected growth may be a wise move.

This helps you:

• Lock in part of your growth
• Reduce sequence-of-returns risk
• Create a predictable income you can count on regardless of the market

5. When Longevity Risk Becomes a Concern

One of the top fears for retirees—especially women—is outliving their money.

An annuity, when purchased at the right time, can dramatically reduce your risk of running out of money. The key is timing, which requires planning.

These are powerful tools for covering late-life expenses and protecting against outliving your money.

Common Mistakes to Avoid

• Waiting too long to take income. One of the best features of some annuities is that the insurance company can fund part or all your retirement.
• Investing too much money into an annuity. You still need liquidity. Only a portion of your portfolio should go into annuities.
• Waiting too long. The older you are, the less time you have for potential income or to get your money returned to you.
• Failing to compare options. Work with an independent advisor who can shop multiple carriers.
• Ignoring inflation. Consider options with income that increases over time.
• Forgetting taxes. Know how your annuity income will be taxed, especially if funded with after-tax dollars.

Why Timing Matters

Let’s say a 60-year-old male invests $300,000 into an annuity with a 10-year deferral. He could receive $36,000+ annually starting at age 70—for life.

If he waits until age 68 to buy that same annuity? His income may drop to around $28,000 annually.

That means $100,000s less income over retirement, depending on how long he lives.

Always include your spouse in your plan for guaranteed income in the event they outlive you.

Some of My Favorite Retirement Strategies

One of my favorite strategies is layered income planning, which includes:

• Social Security, pensions, and annuities
• Annuities for “need-based” expenses
• Investments or RILAs for growth and accumulation
• Real estate and other passive income
• Emergency reserves and accessible cash for flexibility

This diversified approach provides financial security, peace of mind, and freedom of choice.

Summary – “When Should You Buy an Annuity?”

The best time to buy depends on your situation, including your net worth, age, health, and other financial factors.

Some considerations include:

• Your pre-retirement age, which is 5–10 years from retirement
• If you need to replace your paycheck
• Your goal is to lock in market increases so you can protect gains
• Wanting to eliminate the risk of running out of money
• The desire to have peace of mind in your golden years

Conclusion: When to Buy an Annuity and Why Timing Matters

An annuity is not about giving up control; it’s about gaining financial security and predictability and replacing fear with peace of mind.

You worked hard for your money. You deserve to enjoy your retirement with confidence.

Annuities can help you do just that by ensuring you never run out of income, no matter how long you live or how the market performs.

If you have questions or need support, start here:

Disclosure

TheMillionaireInsider.com® copyrights all materials and intellectual property.

This information is for educational purposes only. It is not intended to replace the advice of any advisor or specialist, nor to provide investment, financial, tax, retirement, planning, or healthcare advice.

Always consult with a qualified professional before making any financial decisions or changes.