The short answer
With an income annuity, the older you are when payments begin, the higher each payment tends to be, because the insurer expects to make payments over a shorter remaining lifespan. That leads some people to delay purchasing or starting an income annuity to get a larger payout. But waiting also means fewer years of income and the risk of needing it sooner, so the best age is a balance rather than simply as-old-as-possible. Interest rates at the time of purchase also matter.
So older starting ages generally raise the payment, but the best timing balances a higher payout against fewer years of income.
Why age raises the payout
Income annuity payments are based partly on life expectancy, so a person starting payments at 75 has a shorter expected payout period than one starting at 65, and therefore receives more per dollar. This is why the same deposit buys a bigger monthly payment at an older age. Our guide to how much income an annuity pays covers the full set of factors.
The shorter expected payout period at older ages is what drives the higher per-payment amount.
How to think about timing
Rather than simply waiting for the highest payout, weigh your income needs, other resources, and health. Delaying can mean a bigger payment but fewer total years of guaranteed income and less protection in the interim. Some people use a deferred annuity purchased earlier that begins payments later. Because this is a significant, often irreversible decision, review the timing with a licensed professional. This is educational information, not a recommendation.
The takeaway: older ages generally raise income annuity payments, but weigh the bigger payout against fewer income years and your needs, with professional guidance.
Frequently Asked Questions
What is the best age to buy an income annuity?
There is no single best age. Older starting ages generally produce higher payments because the expected payout period is shorter, but waiting means fewer years of income, so timing is a balance.
Why do older buyers get higher annuity payments?
Payments are based partly on life expectancy, so an older annuitant has a shorter expected payout period and receives more per dollar deposited.
Should I wait to buy an annuity for a bigger payout?
Waiting can raise the payment but means fewer years of guaranteed income and less protection in the interim. Weigh your needs and health, ideally with a licensed professional.
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