Last updated: March 2026 | Reviewed by: AnnuityJournal Editorial Team
Age 62 is the most financially complicated year of most people’s lives. Social Security starts knocking. Retirement accounts are finally accessible without penalty. And for the first time, the question stops being “am I saving enough?” and starts being “how do I make this last?” That’s exactly where an annuity either makes a lot of sense — or becomes a very expensive mistake. Here’s how to think through it.
Should You Buy an Annuity at 62?
It depends entirely on what problem you’re trying to solve. At 62, annuities serve two distinct purposes — and confusing them leads to bad decisions.
- Accumulation: You’re not ready for income yet. You want to grow money safely for 5–10 more years before you need it.
- Income: You need guaranteed income now or very soon, either to replace a paycheck or to bridge to Social Security.
Most 62-year-olds are in the accumulation camp — they’re still working, or recently stopped, and want to protect a chunk of their savings while growing it for the years ahead. A smaller group needs income immediately, often because they retired early or were laid off and aren’t ready to claim Social Security.
The Social Security Question You Need to Answer First
Before buying any annuity at 62, settle the Social Security question. Here’s why it matters:
If you claim Social Security at 62, you lock in a permanently reduced benefit — typically 25–30% less than your full retirement age benefit. If you wait until 70, your benefit is roughly 76% higher than at 62. That difference compounds for the rest of your life.
An annuity can be a tool to delay Social Security — bridging your income gap from 62 to 67 or 70 so you don’t have to claim early. This strategy, sometimes called a Social Security bridge, can be one of the highest-return moves available to a 62-year-old with sufficient savings.
Example: Tom, age 62, has $400,000 in savings and a Social Security benefit of $2,000/month at 62 or $3,500/month at 70. He places $150,000 in a SPIA (Single Premium Immediate Annuity) that pays $1,800/month for 8 years. He delays Social Security until 70, collecting $3,500/month for the rest of his life instead of $2,000. The SPIA cost him $150,000. The lifetime Social Security increase is worth far more.
Best Types of Annuities at Age 62
Fixed Index Annuity (FIA) — Best for Accumulation
If you’re 62 and still have 7–10 years before needing income, a fixed index annuity is worth serious consideration. You get index-linked growth potential, a 0% floor so you can’t lose money to market downturns, and an optional income rider that builds a guaranteed income base for later.
At 62, a 10-year FIA with a 7% simple income roll-up means your income base roughly doubles by the time you turn 72 — giving you a substantially higher guaranteed income floor when you actually need it. See our reviews of the Athene Agility 10 and Nationwide New Heights 9 for current specifics.
MYGA — Best for Safe Accumulation Without Complexity
A Multi-Year Guaranteed Annuity (MYGA) at 62 works like a tax-deferred CD. You lock in a guaranteed rate — currently around 5–5.5% for 5-year terms — and your money grows with no market risk. At 67, you either annuitize, roll it to another MYGA, or take withdrawals.
For someone who doesn’t want to think about index caps and participation rates, a MYGA is the clean answer. See current MYGA rates.
SPIA — Best for Immediate Income Bridge
If you need income right now at 62 and want to use it as a Social Security bridge, a Single Premium Immediate Annuity is the most direct tool. You hand over a lump sum and receive guaranteed monthly checks starting within 30 days. The tradeoff: you give up control of that principal permanently.
What Does an Annuity at 62 Actually Pay?
Payout depends heavily on annuity type, deposit amount, and whether you want income now or later. Here are realistic ranges for a 62-year-old in 2026:
| Annuity Type | $200,000 Deposit | Income Start | Monthly Income |
|---|---|---|---|
| SPIA (immediate) | $200,000 | Now (age 62) | ~$1,050–$1,150/mo |
| FIA + income rider | $200,000 | Age 72 (10yr defer) | ~$1,400–$1,700/mo |
| MYGA 5-year | $200,000 | Age 67 (lump sum) | ~$255,000 accumulated |
| DIA (deferred income) | $200,000 | Age 72 | ~$1,600–$2,000/mo |
Estimates based on 2026 rates. Actual amounts vary by carrier, state, and contract terms.
What to Avoid at 62
A few annuity mistakes are especially costly at this age:
- Don’t buy a variable annuity with high fees: A variable annuity with 2–3% in annual fees will eat your retirement. The market risk plus the fee drag is a bad combination when you have less time to recover.
- Don’t annuitize everything: Keep at least 40–50% of your savings liquid. Annuities are for the portion of your income floor you want guaranteed — not your entire net worth.
- Don’t ignore surrender periods: A 10-year surrender period on a 62-year-old is fine if you have other liquid assets. But if this is your only savings, locking it up until 72 with surrender charges is a real risk.
- Don’t buy before settling Social Security strategy: Your annuity decision and your Social Security claiming decision interact. Get both right before signing anything.
How Much Should a 62-Year-Old Put in an Annuity?
A common guideline: allocate enough to cover your essential expense gap — the difference between your guaranteed income (Social Security, pension) and your monthly must-pay bills. The rest stays flexible.
Example: Carol, age 62, has $600,000 saved. Her essential expenses are $4,000/month. She’ll get $2,200/month from Social Security at 67. Her gap is $1,800/month. She places $250,000 in a FIA with an income rider targeting $1,800/month at 67 — covering the gap with a guarantee. The remaining $350,000 stays in a diversified portfolio for growth and flexibility.
Use our annuity income calculator to run your own numbers.
Frequently Asked Questions
Is 62 too young to buy an annuity?
No — but it depends on the type. A MYGA or FIA for accumulation at 62 is sensible. Annuitizing for immediate lifetime income at 62 locks in lower payouts than waiting to 65 or 70, because the carrier is on the hook for more years. If you can defer, you generally should.
Can I put IRA money into an annuity at 62?
Yes. Annuities can be held inside a traditional IRA or Roth IRA. The tax deferral is redundant inside a traditional IRA (the IRA already defers taxes), but the guaranteed income and principal protection features still apply. See our guide on annuities in an IRA.
What if I change my mind after buying?
All annuities have a free look period — typically 10–30 days depending on your state — during which you can cancel for a full refund. After that, surrender charges apply if you withdraw beyond the free withdrawal amount. This is why you should never feel rushed into an annuity purchase.
How does buying an annuity at 62 affect my taxes?
Growth inside a non-qualified annuity is tax-deferred. Withdrawals are taxed as ordinary income on the earnings portion (LIFO basis). At 62, you’ve passed the 59½ threshold so there’s no IRS early withdrawal penalty. See our full guide: how annuities are taxed.
Should I use an annuity to bridge to Social Security at 62?
It’s one of the highest-return strategies available to early retirees with sufficient savings. A SPIA or short-term period-certain annuity can replace income from 62 to 67 or 70, letting you delay Social Security and lock in a permanently higher benefit. Whether it makes sense depends on your health, other assets, and how long you expect to live.
