If you’re considering an annuity, one of the biggest questions is when to turn it into income.
Should you annuitize now… or wait until you’re older?
The short answer: it’s usually smarter to wait.
But as with all retirement decisions, your personal situation matters.
Let’s walk through the numbers, the options, and how to decide what’s right for you—using real-world examples John Stevenson, The Guaranteed Retirement Guy, shows clients every day.
Need help choosing the best annuity for your unique situation? Have questions about getting an annuity? If so, it’s best to speak with an annuity specialist. Watch this short video to see how I can help you do this (at no cost to you!)
Tip: See how much an annuity could pay you using our annuity calculator
Why Timing Matters When Annuitizing
Annuitizing means turning a lump sum into a guaranteed monthly paycheck.
The older you are when income starts, the higher that paycheck usually is.
Why?
Because insurance companies are pricing income based on life expectancy.
Waiting even a few years can dramatically increase what you receive—without adding more money.
💡 Pro Tip: This is one of the most overlooked levers in retirement income planning.
👉 Want help comparing your options? Schedule a call with me here.
Immediate Income: What Happens If You Annuitize Now?
Let’s start with a 62-year-old, single life, $500,000 deposit.
Using a SPIA (Single Premium Immediate Annuity) with a cash refund option:
- Immediate income starting next month
- About $2,935 per month
- Fully guaranteed for life
Top carriers in this range often include companies like Athene, New York Life, and MassMutual.
This can make sense if:
- You need income right now
- You don’t want to wait
- You value simplicity over flexibility
But here’s the tradeoff…
Once you annuitize a SPIA, you can’t undo it.
Waiting Five Years: The Same Money, Much Higher Income
Now let’s take the same $500,000 and simply wait five years.
Instead of a SPIA, we use a DIA (Deferred Income Annuity).
- Income starts at age 67
- Monthly income jumps to about $4,167 per month
That’s roughly $1,100 more per month or $13,000+ more per year.
No extra risk.
No additional investment.
Just patience.
👉 Curious what waiting could do for your income? Try the annuity calculators here.
SPIA vs DIA: What’s the Difference?
Here’s the simple breakdown:
SPIA (Immediate)
- Income starts now
- Highest certainty
- No access to principal once started
DIA (Deferred)
- Income starts later
- Much higher payments
- Still irreversible once annuitized
Both can work—but neither offers flexibility once income begins.
That’s where income riders come in.
Income Riders: Often the Best of Both Worlds
An income rider is attached to a fixed or fixed indexed annuity.
Using the same $500,000 at age 62:
Income Starts Now
- About $2,819 per month
- Slightly less than a SPIA
- Still guaranteed for life
- You keep access to cash value
This flexibility is why many retirees prefer income riders—even with slightly lower starting income.
💡 Pro Tip: Income riders allow you to change your mind later. SPIAs do not.
Waiting with an Income Rider: Where It Really Shines
Now let’s defer income five years with an income rider.
- Monthly income: about $4,400+
- Roughly $200 more per month than a DIA
- About $2,400 more per year
Carriers like Nationwide often lead here, combining:
- Strong income
- High ratings
- Excellent flexibility and service
You can:
- Start income earlier
- Delay income longer
- Or even cancel and take remaining cash (subject to surrender rules)
That flexibility is huge.
👉 Want help deciding if an income rider fits your plan? Schedule a call here.
What If You Wait Even Longer?
If you can wait 8 years instead of 5:
- $500,000 can generate $5,600–$5,700 per month
- Around $67,000 per year
- All contractually guaranteed
That’s the power of proper planning early.
But remember:
Higher income later only helps if you can afford to wait.
So… Annuitize Now or Wait?
Here’s the honest answer:
- If you need income now → Annuitize now
- If you can wait → Waiting always pays more
- If you want flexibility → Income riders usually win
The “best” choice depends on:
- Your income needs
- Other assets (Social Security, pensions, savings)
- Your desire for flexibility vs certainty
There is no one-size-fits-all solution.
Conclusion
Waiting to annuitize almost always increases income.
But smart retirement planning isn’t just about maximizing numbers—it’s about matching income to your life.
That’s why I encourage you to:
- Use the annuity calculators
- See real numbers for your age and situation
- Then talk through your options before making a permanent decision
Need help with finding the best annuity for your retirement?
Click here to schedule a call with me.
On the call, I can help you:
- Determine what type of annuity is best for you
- Find the highest paying annuities for your unique situation
- Answer any other questions you may have