When is the Best Time to Buy an Annuity?

The best time to buy an annuity is five to ten years before retirement for most people. Timing an annuity purchase is one of the most common questions we hear from people in their late 50s and 60s. Should you buy now while rates are high? Wait until you’re closer to retirement? Or hold off until you actually need the income?

The answer depends on what type of annuity you’re buying and what you need it to do. A MYGA used for capital preservation has a different optimal purchase window than a fixed indexed annuity with a 10-year roll-up period or a SPIA designed to cover monthly expenses starting next year.

This guide breaks down the key factors — age, interest rates, life events, and income rider mechanics — so you can make an informed decision.

What Is the “Retirement Red Zone” — and Why Does It Change Everything?

The retirement red zone is the five-year window before and five years after your retirement date — roughly ages 57 to 67 for most people who plan to retire at 62, or 60 to 70 for those targeting age 65.

During this period, your portfolio is at maximum risk from what financial planners call “sequence of returns risk.” A 30% market drop when you’re 25 is painful but recoverable. The same drop at 62 — right when you’re about to stop contributing and start withdrawing — can permanently reduce your income for the rest of your life.

Example: Tom and Sharon both retire at 65 with $500,000 in their 401(k)s. Tom’s market drops 28% in year one of retirement; he has to sell shares at the bottom to cover living expenses. Sharon protected $250,000 in a MYGA before retiring, so her core expenses are covered regardless of the market. Five years into retirement, Tom’s portfolio is significantly smaller than Sharon’s — not because of long-term market performance, but because of the timing of the early losses.

This is the core argument for annuities in the red zone. A MYGA or FIA purchased at 60–63 protects the assets you’ll need most, at exactly the moment they’re most vulnerable.

What Is the Best Age to Buy a MYGA or Fixed Annuity?

For MYGAs, the best age to buy is whenever you have money you won’t need for 3–7 years, and you want a guaranteed rate higher than competing alternatives. That generally means ages 55–70 are the prime MYGA window.

The math is simple: a 5-year MYGA at 5.40% started at age 60 matures when you’re 65 — just as retirement begins. A 3-year MYGA at 5.15% started at age 62 matures at 65. You can ladder MYGA terms to align maturities with your expected income needs.

MYGA Purchase Ages — What to Expect

One important note for ages 73+: MYGAs held inside a traditional IRA are still subject to Required Minimum Distributions (RMDs). You can take the RMD as the free withdrawal allowance (usually 10% of the account value per year) without surrender charges, but confirm this with your carrier before purchasing.

What Age Is Best for Buying an Income Annuity (SPIA or FIA with Rider)?

Income annuities work differently. Monthly payout rates on SPIAs rise with age because the insurance company expects to make fewer total payments. Waiting until 70 instead of 65 to buy a SPIA can increase your monthly check by 12–18%.

But there’s a counterweight: every year you wait, you miss five years of guaranteed monthly income.

The Breakeven Analysis

A 65-year-old who buys a $200,000 SPIA receives $1,170–$1,280 per month (using mid-range carrier estimates). A 70-year-old buying the same SPIA receives approximately $1,310–$1,430 per month.

The 70-year-old’s monthly income is about $140 higher. But the 65-year-old received 60 months of income before the 70-year-old started — that’s roughly $72,000 in total payments. The 70-year-old’s higher monthly check takes approximately 43 additional months (about 3.5 years) to recoup those 60 months of missed payments. The “breakeven age” where later purchase becomes superior is around age 83.5.

If your family has a history of longevity and you’re in good health, waiting until 70 can make mathematical sense. If you have health concerns or need the income now to cover a gap, buying earlier is clearly the better choice.

FIAs with Income Riders: Earlier Is Almost Always Better

For fixed indexed annuities with guaranteed lifetime withdrawal benefit (GLWB) riders, the opposite logic applies: earlier purchase is typically better. Here’s why.

Income riders grow your benefit base at a guaranteed “roll-up rate” — typically 5–6% per year, compounded — regardless of index performance. The longer the roll-up period, the larger the benefit base, and the higher your eventual guaranteed income payments.

Example: Carol, age 57, puts $200,000 into an FIA with a 6% compound roll-up income rider. By age 67 (10-year roll-up), her benefit base has grown to approximately $358,000. At a 5.5% payout factor for age 67, she receives roughly $19,690 per year ($1,640/month) in guaranteed lifetime income — from her original $200,000 deposit.

If Carol had waited until 62 to purchase, she’d have a 5-year roll-up instead of 10, producing a benefit base of approximately $268,000 and about $14,740/year in income — $4,950 less annually, or $412/month less for life. 

How Do Interest Rates Affect When to Buy an Annuity?

Annuity rates — especially MYGA rates — are closely correlated with 10-year Treasury yields. When Treasury yields rise, insurers can earn more on their bond portfolios, and they pass a portion of those gains to consumers through higher annuity crediting rates. When Treasury yields fall, MYGA rates tend to follow.

As of February 2026, the 10-year Treasury yield is approximately 4.45%. MYGA rates from A-rated carriers are running 50–115 basis points above Treasuries, which is a historically normal spread.

What does that mean practically? If Treasury yields fall to 3.5% over the next two years — consistent with a more aggressive Fed easing cycle — MYGA rates could drop to the 4.25–4.75% range. That’s still reasonable by historical standards, but meaningfully lower than today’s 5.10–5.60%.

Conversely, if inflation reaccelerates and yields rise to 5.0–5.5%, MYGA rates could push higher. But nobody has reliably predicted rate movements, and waiting for a rate peak that may or may not come has a measurable opportunity cost.

Should You Wait for Higher Rates Before Buying an Annuity?

Waiting for higher rates almost always loses on a risk-adjusted basis. Here’s the math that most people don’t run.

Scenario: You have $200,000 ready to invest, and you’re considering a 5-year MYGA at today’s rate of 5.40%. You decide to wait 12 months, hoping rates rise to 5.75%.

During those 12 months, your $200,000 sits in a money market account earning 4.85%. That’s $9,700 in one year. A locked-in MYGA at 5.40% would have earned $10,800 — $1,100 more in year one alone.

Now assume rates do rise to 5.75% in 12 months (a generous assumption — rates could easily fall instead). You lock in a 5-year MYGA at 5.75%. Over the next 5 years, your $200,000 grows to $263,700 vs. $261,200 under the original 5.40% MYGA. That’s a $2,500 gain — but you gave up $1,100 in year one, plus the compounding effect.

The conclusion: locking in a strong rate now typically outperforms waiting, unless you have a strong reason to believe rates will rise significantly and quickly. Most financial advisors recommend buying in tranches — lock in a portion now and invest the rest when rates change — rather than an all-or-nothing timing strategy.

Why Waiting Too Long Reduces Income Rider Payouts

For income riders specifically, time is the engine that drives value. The roll-up mechanic compounds your benefit base every year the contract is in deferral. Once you activate income withdrawals, the roll-up stops.

Many retirees make the mistake of buying a FIA with an income rider at 68, using it for 2–3 years of roll-up, and then activating income at 70 or 71. The short deferral period produces far less income than the same product purchased at 58 with a 10-year roll-up.

A secondary issue: some income riders charge a fee (typically 0.75%–1.25% of the benefit base per year). If you purchase at 68 and activate income at 70, you’ve paid 2 years of rider fees for a modest benefit increase. The product is most efficient with a longer runway.

If you’re 62–65 and still years away from needing income, a FIA with an income rider bought now — and left to compound for 7–10 years — is often a more powerful tool than waiting until you’re ready to turn income on. Use our income rider calculator to see how much an indexed annuity with income rider would pay you.

What Life Events Should Trigger an Annuity Evaluation?

Certain life milestones reliably signal that an annuity conversation makes sense. If any of these apply to you, it’s worth requesting a comparison quote.

Retirement or Job Change

A 401(k) rollover is one of the most common entry points into annuities. When you leave an employer and roll funds into an IRA, you have a one-time opportunity to reposition assets without current-year taxes. Many people move a portion of that rollover into a MYGA or FIA to separate “income money” from “growth money.”

Pension Lump Sum Election

If your employer offers a choice between a monthly pension or a one-time lump sum, an immediate annuity can replicate the pension’s monthly payment — sometimes at a higher rate than the company pension, with better survivor benefit options.

Selling a Home or Business

A large, taxable liquidity event is a trigger for annuity consideration. Structuring a portion of the proceeds into a MYGA creates tax-deferred growth and delays recognition of interest income until you choose to withdraw.

Receiving an Inheritance

An inheritance typically arrives at a time when the recipient is already in their 60s or 70s. A lump sum that isn’t earmarked for a specific need is a natural fit for a MYGA or income annuity, depending on whether income or preservation is the priority.

Identifying an Income Gap

If your Social Security plus other guaranteed income doesn’t cover your fixed monthly expenses, that gap is the most straightforward reason to purchase an income annuity. Calculate the gap, get SPIA quotes to cover it, and keep the rest of your portfolio in growth assets.

How to Take the Next Step

The best time to buy an annuity is when the product matches your timeline, the rates are competitive, and you’ve compared multiple carriers. All three conditions are currently in place.

My Annuity Store is an independent annuity brokerage licensed in 47 states. We compare rates from dozens of A-rated carriers — not just one or two — and our advisors help match the right product to your specific retirement plan.

• See today’s live MYGA rates — updated daily from A-rated carriers across 3, 5, and 7-year terms
• Request a free personalized quote — a licensed advisor will respond within one business day
• Calculate your retirement income — see how much monthly income a given premium generates at your age
• Compare annuity types — our full guide to MYGAs, FIAs, and SPIAs for retirement

Frequently Asked Questions

At what age is it best to buy an annuity?

It depends on the type. MYGAs are most efficient for ages 55–70 with a 3–7 year timeline. FIAs with income riders work best when purchased at 55–62, giving the income benefit a base of 7–10 years to compound. SPIAs produce the best monthly income at ages 65–72. See our full best annuities for retirement guide for a type-by-type breakdown.

Should I wait for higher interest rates before buying a MYGA?

In most cases, no. Waiting has a real opportunity cost — your money earns less while you wait, and rates may not rise. With 5-year MYGAs currently at 5.10–5.60%, the rate environment is historically strong. A better approach is to lock in a portion of your funds now and reassess if conditions change materially.

What is the retirement red zone, and how does it affect annuity timing?

The retirement red zone is the 5 years before and after your retirement date — typically ages 57–67. During this window, your portfolio is most vulnerable to market losses because you have limited time to recover before needing to withdraw. Annuities are especially valuable here because they protect principal and lock in guaranteed rates at exactly the moment your savings are most at risk.

Does waiting to buy an SPIA increase my monthly payout?

Yes — SPIA payouts rise with age. A 70-year-old receives roughly 12–18% more per month than a 65-year-old for the same premium. However, you must factor in the payments you missed by waiting. Use our SPIA calculator to run the breakeven analysis for your age and health situation.

What life events are the best triggers for buying an annuity?

The strongest triggers include a 401(k) rollover or job change, a pension lump sum election, a home or business sale, an inheritance, or identifying a specific income gap in your retirement budget. If any of these apply, request a free quote to see current options from A-rated carriers.