Last updated: March 2026 | Reviewed by: AnnuityJournal Editorial Team
Sixty-five is where retirement stops being abstract. Medicare kicks in. Most people are either already retired or have a date circled. And the question of guaranteed income — something you can count on no matter what the market does — becomes real in a way it wasn’t at 55 or even 62. An annuity at 65 can be the right move. It can also be the wrong one. The difference usually comes down to timing and type.
Is 65 a Good Age to Buy an Annuity?
Yes — for the right kind of annuity. At 65, you’re at the sweet spot where annuity payouts are meaningfully higher than at 62 (the carrier covers fewer years of expected payments) but you still have enough runway to benefit from tax-deferred accumulation if you don’t need income for another 5–7 years.
The key question at 65: do you need income now, or in 5–7 years? That answer determines everything about which product makes sense.
Best Annuity Types at Age 65
Fixed Index Annuity with Income Rider — Best for Deferred Income
If you’re 65 and don’t need income until 70–72, a fixed index annuity with an income rider is a compelling option. A 7% simple roll-up on a $200,000 deposit over 7 years produces an income base of roughly $298,000 — generating approximately $15,000–$17,000 per year in guaranteed lifetime income when you activate it at 72.
Carriers worth comparing at this age: Allianz 222, North American BenefitSolutions 10, and Nationwide New Heights 9.
MYGA — Best for Safe Accumulation
A 5-year MYGA at 65 matures right at 70 — precisely when most people want to activate Social Security and need their assets positioned. With rates near 5–5.5% in 2026, a $200,000 MYGA grows to roughly $255,000 over 5 years with zero market risk and full tax deferral. Clean and simple.
SPIA — Best for Immediate Guaranteed Income
At 65, a Single Premium Immediate Annuity pays meaningfully more per month than at 62. A $200,000 SPIA for a 65-year-old generates approximately $1,150–$1,300/month for life — about 10–15% more than the same purchase at 62, simply because the expected payout period is shorter.
If you need income now and have other liquid assets, a SPIA covering your essential expense gap is one of the most efficient income tools available.
What Does an Annuity Pay at 65?
| Annuity Type | $200,000 Deposit | Income Start | Monthly Income |
|---|---|---|---|
| SPIA (immediate) | $200,000 | Now (age 65) | ~$1,150–$1,300/mo |
| FIA + income rider | $200,000 | Age 72 (7yr defer) | ~$1,250–$1,450/mo |
| MYGA 5-year | $200,000 | Age 70 (lump sum) | ~$255,000 accumulated |
| DIA (deferred income) | $200,000 | Age 75 | ~$1,800–$2,200/mo |
Estimates based on 2026 rates. Actual amounts vary by carrier, state, and contract terms.
The Medicare Factor Most People Miss
Medicare starts at 65, but it doesn’t cover everything. Long-term care, dental, vision, and supplemental coverage all add up — often $500–$1,000/month in out-of-pocket costs that most retirement projections undercount.
This matters for annuity planning because it affects how much guaranteed income you actually need. Before buying, map out your real monthly expenses including healthcare — not just the number you hope to spend.
How Much Should a 65-Year-Old Put in an Annuity?
The income flooring approach works well at 65. Calculate your essential monthly expenses, subtract guaranteed income sources (Social Security, pension), and cover the gap with an annuity. Discretionary spending stays in a liquid portfolio.
Example: Barbara, 65, has $750,000 saved. Essential expenses: $5,000/month. Social Security at 70: $2,800/month. Gap: $2,200/month. She places $300,000 in a FIA with an income rider targeting $2,200/month at age 70. The remaining $450,000 stays invested for growth, travel, and flexibility. She doesn’t touch Social Security until 70 and locks in the higher benefit permanently.
What to Avoid at 65
- Variable annuities with high fees: At 65, you have less time to recover from fee drag. A 2.5% annual expense ratio on a variable annuity is a serious headwind.
- Over-annuitizing: Putting more than 40–50% of savings into annuities at 65 leaves too little flexibility for healthcare costs, home repairs, and unexpected needs.
- Buying without comparing quotes: Annuity payouts vary 10–20% between carriers for identical deposits. Always get at least three illustrations before deciding.
Frequently Asked Questions
Is it better to buy an annuity at 65 or wait until 70?
Waiting generally produces higher income payments because the payout period is shorter. However, waiting also means 5 more years of potential market risk on that money, and 5 years of foregone tax deferral inside the annuity. The right answer depends on your health, other income sources, and risk tolerance. If guaranteed income now helps you sleep at night, 65 is a fine time to act.
Can I still buy an annuity if I have a pension?
Yes — and it may still make sense. A pension covers a baseline, but if your expenses exceed your pension plus Social Security, an annuity fills that gap efficiently. Some buyers also use annuities to provide survivorship income for a spouse whose pension won’t continue at full value after death.
Do annuity payments affect Medicare premiums?
Annuity income counts as ordinary income and can affect your IRMAA surcharge — the income-related adjustment that increases Medicare Part B and D premiums above certain thresholds. In 2026, the IRMAA threshold starts at $106,000 for single filers. If annuity income pushes you over that line, your Medicare premiums go up. Worth modeling with a tax advisor before buying. See our guide: how annuities are taxed.
What’s the difference between an annuity and a pension?
Functionally, a SPIA and a pension work the same way — a guaranteed monthly payment for life. The difference is source: a pension is funded by an employer, a SPIA is funded by your own savings. If you don’t have a pension, a SPIA is how you build one. See our retirement income planning guide for a fuller comparison.
Is my annuity safe if the insurance company fails?
Yes — up to your state’s guaranty association limit, typically $250,000 per carrier. For deposits above that threshold, consider splitting between two carriers. See our state guaranty association guide for your state’s specific coverage limit.
