Edited by 
Edited by 
Buying an annuity at age 70 may bring a steady income, but the value depends on your lifespan and the annuity’s terms. The decision to buy an annuity at 70 is complex and hinges on an individual’s unique financial situation and retirement goals. Consider talking with a financial advisor when making any major decisions about your retirement, like buying an annuity.
Benefits of Buying an Annuity at Age 70
The key advantage of purchasing an annuity at 70 is the guarantee of a steady income stream. An annuity provides regular payments and acts like an insurance policy, unaffected by market fluctuations. This guarantees financial certainty for many retirees. However, it’s essential to remember that the benefits can vary for each individual, as there is no one-size-fits-all solution in retirement planning.
Another exciting feature of annuities is tax-deferred growth. The money you put into an annuity grows without being taxed until you start receiving payments. More than being a potential catch for you, approaching retirement in a high tax bracket, it becomes an advantageous tax shield. This matters less once you reach age 70.
Moreover, an annuity can provide protection from volatile market changes, depending on its type. This security, combined with lifetime income, can be appealing during retirement — especially around age 70.
How Much Will an Annuity Pay at Age 70?
At 70, a $100,000 immediate annuity pays roughly $675–$708 per month for a male, depending on the payout option. A similar annuity pays between $642 to $675 for a female.
Higher contributions yield proportionally larger payouts. For example, a $500,000 annuity pays around $3,553 per month for a male with single life only, or $3,389 for a female. Choosing options a period certain or cash refund lowers monthly payment.
Overall, payments vary based on gender, annuity value and whether a guaranteed minimum payout period is included.
Monthly Payouts for a 70-Year-Old Male
| Annuity Value | Single Life Only | Single Life With 10 Year Certain | Single Life With 20 Year Certain | Single Life With Cash Refund |
|---|---|---|---|---|
| $100,000 | $708 | $702 | $607 | $674 |
| $250,000 | $1,775 | $1,755 | $1,518 | $1,685 |
| $500,000 | $3,553 | $3,510 | $3,035 | $3,370 |
| $1 million | $7,111 | $7,021 | $6,071 | $6,741 |
Monthly Payouts for a 70-Year-Old Female
| Annuity Value | Single Life Only | Single Life With 10 Year Certain | Single Life With 20 Year Certain | Single Life With Cash Refund |
|---|---|---|---|---|
| $100,000 | $675 | $663 | $594 | $642 |
| $250,000 | $1,693 | $1,658 | $1,486 | $1,605 |
| $500,000 | $3,389 | $3,315 | $2,974 | $3,210 |
| $1 million | $6,780 | $6,631 | $5,952 | $6,421 |
Disadvantages to Buying an Annuity at Age 70
Conversely, potential downsides exist in buying an annuity at 70. A downside is missing out on key benefits like tax deferral or long-term payouts.
Another possible downside is high fees associated with some annuities that can gradually reduce your investment’s value. Think of management fees, risk charges and surrender fees as slow leaks that can empty your bucket over time. The fees you’ll pay will depend on the type of annuity you buy and the company you are working with.
Thirdly, consider the lack of liquidity of annuities. While you won’t have to worry about early withdrawal penalties, you typically can’t withdraw a lump sum after annuitization. It’s important that you’ll have enough money for other investments or things you may need.
Should I Wait Until Age 75?
The age 75 rule is a general observation that annuities often offer higher monthly payouts when purchased at age 75. Since a 75-year-old has a shorter life expectancy than a 70-year-old, the monthly payments are higher.
Someone considering an annuity at 70 might wonder if waiting five more years is worth the potential increase. While payouts are typically higher at 75, deferring also means forgoing five years of guaranteed income. If steady income is needed sooner or there’s concern about longevity, purchasing at 70 may be more practical.
On the other hand, if other income sources are sufficient for now, waiting could yield better long-term value.
Types of Annuities to Buy
Think of each annuity type as a different basket suited to a specific retirement need. The right one for you might be different from someone else and your age may or may not be a factor. Here are some of the most common types of annuities to consider.
- Immediate annuities: Begin paying out instantly after your initial investment and might be the right call for many people buying at the age of 70. This can be appealing to those who need an instant source of funds, which is likely you if you’re considering an annuity this late in life.
- Deferred annuities: Long-term investments in which you invest a sum of money, then receive payments several years down the line after the initial sum has accrued interest.
- Variable annuities: Allow you to invest your payments in different avenues akin to betting on several horses in a race. These annuities can offer growth potential but also carry more risk.
- Fixed annuities: Act like a timed-release pill, guaranteeing specific returns for a specified period and ensuring a stable and predictable income.
- Long-term care annuities: Like an emergency kit, can provide additional benefits if you fall seriously ill or become disabled, potentially covering some of the high costs associated with long-term care. This can be a great way to protect family members from the costs of anything that may happen to you.
It’s worth exploring the types of annuities you think might be a fit for your needs with a professional, such as a financial advisor. They will be able to analyze your personal financial situation and help you make the right choice.
Bottom Line
Deciding whether to buy an annuity at 70 means weighing guaranteed income and tax benefits against potential fees and liquidity limits. Consider other income sources like Social Security, pensions and retirement savings as part of the bigger picture. The right choice for you is going to depend on how your entire financial picture looks.
Tips for Retirement Planning
- Planning out where your income is going to come from in retirement can be tough if you’re not an expert. Working with a professional like a financial advisor can help you assess your situation and make a plan to reach your goals. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- If you’re not sure whether you’ve saved enough for retirement, are on track, consider using SmartAsset’s free retirement calculator tool.
Photo credit: ©iStock.com/Miljan Zivkovic, ©iStock.com/Pekic, ©iStock.com/Lacheev