One of the most common retirement questions is:

"When should I buy an annuity?"

Many people assume the answer depends on age or market conditions.

In reality, the better question is:

What financial problem are you trying to solve?

Annuities aren't designed to outperform the stock market or chase investment returns. They're insurance contracts designed to provide specific contractual guarantees when those guarantees become important to your retirement plan.

Key Takeaways

• The right time to buy an annuity depends on your financial objective—not your age.
• Annuities are designed to provide contractual guarantees, not market growth.
• The four primary annuity objectives are Principal Protection, Income for Life, Legacy, and Long-Term Care.
• Asking the right planning questions helps determine whether an annuity fits your retirement strategy.
• Buying an annuity for the wrong reason can lead to disappointment.

You May Already Own an Annuity

Many people don't realize they already receive income from products that function like annuities.

Examples include:

• Social Security, which provides lifetime income and includes annual cost-of-living adjustments when applicable.
• Traditional pension plans, which provide guaranteed lifetime payments for eligible retirees.
• Required Minimum Distributions (RMDs) from qualified retirement accounts, which create scheduled withdrawals under IRS rules.

Understanding how these existing income sources fit into your retirement plan helps determine whether additional guaranteed income is needed.

Buy an Annuity When You Need a Contractual Guarantee

The best time to purchase an annuity is when you're trying to solve a specific contractual objective.

Annuities generally address four primary retirement needs using the PILL framework:

• Principal Protection
• Income for Life
• Legacy
• Long-Term Care

Once you've identified which objective matters most, it becomes much easier to determine whether an annuity belongs in your retirement plan.

Start With Two Questions

Rather than asking when to buy an annuity, start by answering two questions:

What do you want the money to contractually do?

When do you want those contractual guarantees to begin?

These questions focus on your goals instead of product features.

For example:

• Do you need lifetime income now?
• Are you planning income that won't begin for several years?
• Is protecting principal your highest priority?
• Are you trying to leave money to beneficiaries?

Your answers determine which type of annuity, if any, is appropriate.

Lifetime Income Is a Common Reason to Buy an Annuity

Many retirees purchase annuities because they want dependable income that cannot be outlived.

If there's a gap between your expected retirement expenses and guaranteed income from sources like Social Security or a pension, an annuity may help provide additional contractual income.

Depending on your goals, several annuity types can provide lifetime income, including:

• Immediate Annuities
• Deferred Income Annuities
• QLACs
• Income Riders

The appropriate option depends on when you want payments to begin and your overall retirement strategy.

You Can Plan Years in Advance

Buying an annuity doesn't necessarily mean starting income immediately.

Many people purchase an annuity years before retirement to lock in future contractual income.

If you know you'll need guaranteed income five, seven, or ten years from now, certain annuity products allow you to establish that future income stream in advance.

Planning ahead can provide greater certainty as retirement approaches.

When You Shouldn't Buy an Annuity

An annuity isn't the right solution for every financial goal.

You may want to consider other options if your primary objective is:

• maximizing stock market growth
• speculative investing
• chasing hypothetical returns
• selecting a product based solely on bonuses or illustrations

Annuities are insurance contracts—not investments designed to outperform the market.

Choosing one for the wrong reason often leads to unrealistic expectations.

Focus on the Contract

Before purchasing any annuity, review the contractual guarantees carefully.

Understand:

• what benefits are guaranteed
• when they begin
• how income is calculated
• what happens to beneficiaries
• any surrender charges or withdrawal limitations

The contract—not the sales illustration—defines what the annuity is obligated to provide.

Where to Compare Annuity Options

If you're deciding whether now is the right time to purchase an annuity, use our annuity calculators to compare contractual guarantees from multiple insurance companies.

Reviewing multiple carriers side by side helps identify the annuity that best aligns with your retirement goals and timeline.

The Bottom Line

There isn't a universal age or milestone that signals it's time to buy an annuity.

The right time is when you need a contractual solution for retirement income, principal protection, legacy planning, or long-term care.

By identifying your objective first and comparing products based on their written guarantees, you can determine whether an annuity fits your overall retirement strategy.