What age should you be investing in annuities?

If you’re looking to grow your investing portfolio, you might be wondering when and how you should invest in annuities. In the past, annuities were mainly meant for those ready to retire so that they could have a retirement annuity plan with fixed and guaranteed income once they retired and were no longer working. 

However, there are many different types of annuities these days and you don’t have to be nearing retirement to invest in one and get some advantages. 

The exact age you invest in annuities will depend on a few different things though including what kind of annuity you want to invest in and what kinds of other investments you already have. 

Main Things to Consider 

Although you can buy annuities at any time, those aged 50 to 70 are usually in the best position to buy annuities but the exact age you choose to buy an annuity really depends on your goals. 

Keep in mind you have to be 18 to buy an annuity so you will have to wait until you’re of legal age. Some companies also have their own age requirements so you will need to check the annuity you want to buy and see if they have restrictions or not. 

If a company does have its own age restrictions, they are usually between the ages of 50 to 95. Some companies set it even lower at 75 years. 

Most annuities are purchased by those in retirement or very close to retirement. If you have different or specific goals though, this doesn’t mean you have to wait until retirement to purchase your annuity. 

If you are not in retirement yet and are looking to get a tax-deferred annuity, you might want to look into deferred annuities as these are what most investors invest in that are younger and not close to retirement. 

Different Annuities for Different Ages 

Depending on your age group, there might be some annuities that work better for you compared to others. 

Here is a breakdown of the different annuities and the ones you might consider. 

Late 40s-50s

If you want to buy variable annuities, the best age to do so is in your late 40s or 50s. When you invest in variable annuities, the value of them is based on how well the investments do and how well the market is performing. 

Because of this, variable annuities have more risk compared to other kinds since you can always not get the returns you want. However, there is room for a lot of growth which means you could get up getting more returns. 

Keep in mind the longer you hold onto the investment, the more it will be worth. 

50s and Your Early 60s

If you’re in this age bracket, the best annuity to invest in is an indexed annuity. These come with a fixed interest rate and are also able to grow based on whatever stock market index they are connected to. 

The returns are not as predictable as fixed annuities since they are subject to fluctuations in the market. 

Ages 59-70

People in this age group usually benefit the most from fixed annuities. Whatever premium you have will grow at a certain rate that is guaranteed and then you will be able to convert it into income payments before you retire. 

At this age, you might still be working for a few years so you will have time to earn income while you let the savings of the annuity grow. 

However, keep in mind you are nearing retirement so you don’t want to risk any money on annuities that will not give you the return and income you need. This is why fixed annuities are the best choice because you know exactly how much money you will be earning every month. 

70-75 Years 

If you want to invest in an immediate annuity, the best age to do is 70-75. In fact, some companies will not consider you for an immediate annuity unless you are at least 70 years old. 

This is because it’s immediate income and is meant to support you in retirement so you need to be just about to retire or already retired. 

The Best Age to Buy An Annuity 

There is really no best age to buy an annuity because it depends on your financial goals and how close you are to retiring. You also need to consider when you want payments to start as some annuities will give you income sooner rather than later. 

No matter what annuity you choose, you should wait until you are 70-75 before you begin taking the payments out. 

When in doubt, always talk to your financial advisor as they can look at your unique situation and determine what is best for you and your investment portfolio. 

Exactly what annuity you purchase will also depend on how close you are to retirement and what kind of income you need in the future. 

When you are young, especially under the age of 40, it doesn’t make much sense to buy an annuity. 

Annuities and Age Restrictions 

As mentioned before, many annuity companies will not sell annuities to anyone under the age of 50. You can still invest in other things and grow your money in other ways though. 

In general, the best age to buy an annuity is when you are in your 70s because you get the biggest payout during this time period since you are nearing retirement and looking to receive the income now. 

When you are young, it’s best to invest in things that are riskier because you could get higher returns. If you get low returns, you have plenty of time to recover from them. 

Final Thoughts 

There are many different ages you can invest in annuities as there are different kinds that better suit different ages. When in doubt, waiting until you are 70 is a good idea but always discuss things with your financial advisor as they might have a different opinion based on your situation.