One of the most common questions retirees ask is simple:
“Is now a good time to buy an annuity?”
Should you lock in today’s rates?
Should you wait a few years?
Or was the best time actually a year ago?
These are important questions, especially if you’re planning retirement income. The timing of when you buy an annuity can affect your payouts, guarantees, and overall retirement strategy.
The good news? In today’s environment, annuity rates are still very strong compared to where they were just a few years ago.
Let’s walk through why that is, and how to think about timing an annuity purchase the right way.
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 Annuity Rates Are Higher Right Now
The biggest factor affecting annuity payouts is interest rates.
When interest rates rise, insurance companies can earn more on the money they invest. Because of that, they can offer higher guaranteed payouts to retirees.
Just a few years ago:
- Many fixed annuities paid 2-3%
- Lifetime income payouts were significantly lower
Today:
- Many MYGAs (Multi-Year Guaranteed Annuities) are paying around 5-6%
- Lifetime income riders can generate much higher retirement income
That’s a major difference.
For retirees looking for stable income, today’s rate environment has created some of the strongest annuity payouts we’ve seen in years.
💡 Pro Tip: You can see current annuity rates, companies, and payout examples on my website!
👉 Want help comparing the best annuity options for your retirement? Schedule a call here.
Should You Wait a Few Years Before Buying?
Many retirees consider waiting.
The thinking usually goes like this: “Maybe I should keep my money invested for five more years… then buy an annuity when I retire.”
That strategy can work if markets perform well.
But there’s a risk.
If the market drops right before retirement, your portfolio may shrink, meaning you’ll have less money available to convert into guaranteed income.
This is called sequence of returns risk, and it can seriously impact retirement income planning.
That’s why many retirees choose to secure part of their income now, while leaving other assets invested.
This creates a foundation of guaranteed income—while still allowing growth elsewhere.
How Income Riders Can Create Lifetime Income
One popular strategy involves using an income rider with a fixed indexed annuity.
These riders allow your income base to grow while you defer income.
For example:
- Initial investment: $200,000
- Deferral period: 5 years
- Bonus and roll-up features increase the benefit base
- Lifetime withdrawal rate applied to the higher benefit value
In many cases, that $200,000 could generate over $21,000 per year in lifetime income depending on age and contract details.
And if you defer longer, say until age 67 instead of 62, the income can increase significantly.
The key benefit?
The income is guaranteed for life.
Even if the account value eventually runs down, the payments continue.
Understanding Accelerated Payout Options
Some annuity products offer accelerated payouts early in retirement.
These may look very attractive at first.
For example:
- Higher payments for the first 5-10 years
- Then a 35-40% reduction afterward
This structure can make sense in certain situations:
- Funding early retirement travel
- Bridging income while delaying Social Security
- Covering income gaps before a pension begins
But many retirees prefer income that never decreases.
When comparing annuity options, look carefully at whether payments are:
- Level for life, or
- Higher early but reduced later
💡 Pro Tip: If lifetime stability is your priority, look for annuities that provide level guaranteed income with no future reduction.
MYGAs: A Simple Fixed-Rate Option
Not every retiree wants lifetime income immediately.
Some prefer a safe place to park money while earning interest.
That’s where MYGAs (Multi-Year Guaranteed Annuities) come in.
They function somewhat like CDs but with key differences:
- Fixed interest rate for a set term
- Tax-deferred growth
- Typically higher rates than CDs
Right now, many MYGAs offer:
- 5-6% rates
- Terms between 5 and 10 years
In many cases, the most competitive terms are:
- 5-year
- 7-year
- 10-year
These products can be useful for building future retirement income or simply protecting a portion of your savings.
👉 Want help finding the best MYGA rates available today? Schedule a call with me here.
Combining Annuities With Other Investments
The best retirement plans often use multiple strategies together.
One common approach is the barbell strategy:
Part 1: Guaranteed Income
- Income riders
- Immediate annuities
- DIA or SPIA options
Part 2: Safe Growth
- MYGAs
- Fixed annuities
Part 3: Market Growth
- Stocks
- ETFs
- Brokerage investments
This balanced approach allows retirees to:
- Secure lifetime income
- Maintain growth potential
- Protect against market downturns
Many retirees, both moderately wealthy and very wealthy, use this structure.
Conclusion
In today’s environment, is it a good time to buy an annuity? Yes, it can be a very good time.
Interest rates remain relatively high compared to the past decade, which means:
- Higher lifetime income payouts
- Better fixed annuity rates
- Stronger guarantees for retirement planning
But the real question isn’t just when to buy an annuity.
It’s how the annuity fits into your overall retirement income plan.
The right strategy depends on:
- Your age
- Your retirement timeline
- Your risk tolerance
- Your income needs
That’s why comparing options carefully is so important.
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