As Americans live longer and face growing concerns about outliving their savings, annuities are becoming a popular way to create steady retirement income. Annuity sales surpassed $432 billion in 2024, according to data from LIMRA, drawing many retirees to the promise of guaranteed payments for life.
But while these products can provide stable, reliable income in retirement, the timing of when you buy one can determine whether its a smart or counterproductive financial move. And, the considerations change as you move through different stages of your golden years, as certain life circumstances and other factors can make annuities less attractive.
So, at what point does it not make sense to buy an annuity? Below, financial advisors and retirement specialists explain when age and circumstances should influence your decision, and what other income strategies it could make sense to consider.
Is an Annuity Right for Someone in Their 90s?
Yes, a 90-year-old can buy an annuity, but whether they should is a more complex question. As someone who’s helped many seniors navigate retirement planning, I’ve seen firsthand how important this decision can be for elderly individuals looking for financial security.
Insurance companies typically set upper age limits between 75 and 95 for annuity purchases, with some allowing immediate annuity purchases up to age 100. However, just because you can buy one doesn’t automatically mean you should.
Let’s explore everything you need to know about buying annuities in your 90s – the considerations benefits, and potential pitfalls to help you or your elderly loved one make an informed decision.
Key Points About Annuities for 90-Year-Olds
- Most insurance companies have upper age limits between 75-95 years
- Some companies allow immediate annuity purchases up to age 100
- At age 90, payment periods are typically limited to 10 years maximum (up to age 100)
- Monthly payouts are higher for older purchasers due to shorter life expectancy
- Suitability depends on individual financial circumstances and goals
What Exactly Is an Annuity?
Before diving deeper, let’s make sure we’re all on the same page about what an annuity actually is.
An annuity is a financial contract between you and an insurance company. You provide them with a lump sum of money, and in return, they guarantee you regular income payments for a specified period or for the rest of your life.
The primary purpose of annuities has traditionally been to convert a lump sum into a guaranteed income stream. This can be particularly appealing for retirees concerned about outliving their savings.
Types of Annuities Relevant for 90-Year-Olds
At age 90, not all annuity types make sense. The most relevant options are:
Immediate Annuities (SPIAs)
- Begin paying income right away
- Ideal for those who need income now
- Simple and straightforward option for elderly individuals
- Higher monthly payouts due to shorter life expectancy
Fixed Annuities
- Guaranteed minimum interest rate
- Lower risk option
- Predictable returns
- May offer better rates than CDs or savings accounts
Variable and indexed annuities typically aren’t recommended for 90-year-olds due to their longer investment horizons and higher complexity.
Real-World Example: A 90-Year-Old’s Annuity Purchase
Let me share a common scenario I’ve encountered:
A bank executive suggested to a 90-year-old woman that she purchase an annuity to increase her yield from a certificate of deposit (CD). Her family wondered if this was appropriate given her advanced age or if it might actually be beneficial for avoiding probate upon her passing.
The answer depends entirely on the specific terms of the annuity contract. Here’s what we’d need to evaluate:
5 Critical Questions to Ask Before a 90-Year-Old Buys an Annuity
If you’re considering an annuity for yourself or an elderly loved one, ask the insurance company these essential questions:
1. What are the interest rates?
- Current interest rate offered
- Guaranteed minimum rate in future years
- Ideally should have at least a 3% minimum guaranteed return
- Request the company’s renewal rate history to see how they’ve treated policyholders in the past
2. Is there a Market Value Adjustment (MVA)?
- Is the MVA waived at death?
- MVAs can be positive or negative depending on interest rate changes
- Make sure any negative MVA is waived upon death
- Most companies will pass along a positive MVA to heirs
3. Are surrender charges waived at death?
- Ensure heirs receive the full amount without penalties
- Confirm the contract includes nursing home and medical bailout provisions
- This protects against penalties if illness requires hospitalization or nursing home care
4. Owner and Annuitant Status
- Is the 90-year-old both the owner and annuitant?
- Some agents might recommend naming a younger person to meet age requirements
- This could result in penalties if the annuity needs to be accessed after passing
- Both owner and annuitant should be the same person
5. What is the free withdrawal amount?
- Typically 10% free withdrawal annually
- Some newer plans may offer little to no free withdrawals during the surrender period
- At 90, income needs may require regular withdrawals
- Essential to choose an annuity with sufficient free withdrawal allowances
Benefits of Annuities for a 90-Year-Old
When properly structured annuities can offer several advantages for elderly individuals
Avoiding Probate
Like other investments that allow you to name beneficiaries, annuities bypass the probate process, saving time and money for heirs.
Potentially Higher Returns
Annuities may offer better rates than traditional savings vehicles like CDs or savings accounts, providing more income.
Guaranteed Income
The certainty of regular payments can provide peace of mind and financial stability.
Higher Monthly Payouts
Due to shorter life expectancy, a 90-year-old will receive larger monthly payments than younger annuity buyers.
Downsides and Risks to Consider
Annuities aren’t without drawbacks, especially at advanced ages:
Limited Term Options
At 90, payment guarantees typically max out at 10 years (to age 100).
Inflation Concerns
Fixed payments lose purchasing power over time due to inflation.
Fees and Charges
Annuities often involve various fees that can reduce overall returns.
Lost Opportunity Cost
Money placed in an annuity can’t be invested elsewhere for potentially higher returns.
Health and Longevity Considerations
If health is poor, you might not benefit from the annuity long enough to make it worthwhile.
How Much Does a $100,000 Annuity Pay to a 90-Year-Old?
Due to the shorter life expectancy, a 90-year-old would receive significantly higher monthly payments than younger buyers. While specific amounts vary by provider, a $100,000 immediate annuity might pay considerably more than the $608 monthly that a 65-year-old woman might receive.
The exact payment would depend on:
- Current interest rates
- Gender (women typically receive smaller payments due to longer life expectancy)
- Whether payments are guaranteed for a specific period
- The specific insurance company’s rates
Alternative Options to Consider
Before committing to an annuity at 90, consider these alternatives:
Certificates of Deposit (CDs)
- More liquid than annuities
- No surrender charges
- FDIC insured up to $250,000
- May offer competitive rates for shorter terms
Treasury Securities
- Backed by the U.S. government
- Various term options
- Can be more liquid than annuities
- May offer competitive rates
Money Market Accounts
- Higher liquidity
- FDIC insured up to $250,000
- May offer reasonable rates in high-interest environments
Staying in Cash or Conservative Investments
- Maximum liquidity for healthcare or other needs
- No surrender charges or complicated contracts
- Simplicity for both the individual and eventual heirs
Making the Decision: Factors to Consider
When deciding if an annuity makes sense for a 90-year-old, consider:
Financial Needs
- Current income requirements
- Other sources of income (Social Security, pensions, investments)
- Anticipated expenses, including healthcare costs
Health Status
- Current health condition
- Family longevity history
- Projected life expectancy
Legacy Goals
- Desire to leave assets to heirs
- Need to avoid probate
- Tax considerations for estate planning
Risk Tolerance
- Comfort with investment risk
- Need for guaranteed income
- Preference for simplicity
A Balanced Approach
In my experience working with elderly clients, I’ve found that a balanced approach often works best. This might mean:
- Keeping a portion of assets liquid for emergency needs
- Placing some funds in an annuity for guaranteed income
- Maintaining some investments for potential growth and to counter inflation
The Bottom Line
Can a 90-year-old buy an annuity? Yes.
Should they? It depends entirely on their individual circumstances.
An annuity might make sense for a healthy 90-year-old with a family history of longevity who wants guaranteed income and probate avoidance. However, it might be inappropriate for someone with significant health issues or who needs maximum liquidity for healthcare costs.
The key is thorough evaluation of the specific annuity contract terms and careful consideration of individual needs and goals. Working with a financial advisor who specializes in senior financial planning and who doesn’t have a conflict of interest can help ensure the decision aligns with overall financial objectives.
Remember, at age 90, financial decisions should prioritize simplicity, security, and meeting current needs while preserving flexibility for changing circumstances.
Final Thoughts
I’ve seen annuities work wonderfully for some elderly clients and be completely wrong for others. There’s no one-size-fits-all answer.
If you’re a 90-year-old considering an annuity – or a family member helping with this decision – take your time. Ask lots of questions. Get everything in writing. And consider consulting with an independent financial advisor who can provide objective guidance tailored to your specific situation.
Your financial peace of mind (or that of your loved one) is worth the extra effort to make the right choice.
At what age should you not buy an annuity? What experts think
“Generally, we dont recommend annuities to people under age 50 [because] there are tax penalties for withdrawals before age 59 ½,” says Jonathan Viscounte, CFP, CLU, ChFC, a financial planner at Prudential Advisors. “[And] many times, young people have various needs that come up before they reach retirement age.” Younger investors also have decades to ride out market volatility and benefit from potentially higher returns in stocks and other growth investments.
On the other end of the spectrum, insurance companies often stop selling annuities to seniors after age 90 to 95, according to Leah Brandt, managing partner of AnnuityPath, an online annuity resource and brokerage.
“The insurance companies know the likelihood of death happening before they make a return on the policy is high,” Brandt says.
Age limits aside, though, other considerations come into play. Here are a few other times when an annuity may not make sense.
When annuities don’t make sense for older adults
Annuities come with various costs, including administrative fees and surrender charges. For adults over 80, these expenses become more problematic because theres less time for the guaranteed income to offset the costs.
Experts say annuities may not make sense in these scenarios:
- You have your basic needs covered. Viscounte says if you can cover your essential expenses with Social Security and pensions, and can comfortably withdraw 3% to 5% from your remaining savings for discretionary spending, paying fees to guarantee income may not be worth it.
- You need cash for emergencies or want investment flexibility. “When you put money into an annuity, you generally lose the liquidity of that money,” says Mary Stork, senior vice president and general manager at USAA Retirement and Investment Solutions. Surrender charges can be high if you need to access funds early.
- You have major health issues. Brandt highlights that income annuities arent ideal for people with health problems, even though some companies offer higher payouts based on medical conditions. “In my experience, the increased income isnt worth it,” she notes.
Before committing, ask yourself three questions to determine whether annuity payments are worth the trade-offs:
- What risk are you trying to solve? Viscounte recommends identifying the concern driving your interest (e.g., market risk, outliving your savings).
- How much liquidity will you lose? Brandt advises keeping no more than 50% to 60% of your assets (excluding your home) in annuities.
- What are the tax implications for your heirs? “Youll receive a tax deferral in [a non-qualified] annuity while youre living, Viscounte points out. “[But] eventually your heirs will pay taxes on the growth when youre not.” In a regular investment, on the other hand, theyll receive a step up in the cost basis and avoid paying taxes on growth.
How to Buy an Annuity: What Age Is Too Old or Too Young?
FAQ
Can you buy an annuity at any age?
The short answer is yes, you can purchase an annuity at virtually any age, so long as you’re at least 18 or older. While there’s no federal law setting specific age restrictions for annuity purchases, many annuity companies impose their own age limitations. Typically, these range from a minimum age of 50 to a maximum age between 75 and 95.
How old do you have to be to get an annuity?
Generally, the minimum age requirement is 18, while the upper age limit typically falls between 75 and 95. It’s crucial to check with the specific insurance company you’re considering to determine their age restrictions. Let’s examine a real-world scenario where a 90-year-old individual is considering an annuity.
Do annuities have an upper age limit?
Most annuities have an upper age limit for purchase, which can vary depending on the type of annuity and the provider’s specific rules. These limits are set because annuities are fundamentally long-term investments aimed at generating retirement income. Providers assess risks and potential returns based on the age of the annuity holder.
Should a 90-year-old get an annuity with free withdrawals?
At age 90, the individual may require income from the annuity to maintain their quality of life. In this case, an annuity with free withdrawals is essential. If the terms of the annuity contract meet the criteria outlined above, there are several potential benefits for a 90-year-old:
Can you buy an annuity at 45?
Yes, you can buy an immediate annuity at age 45, but they are typically more suitable for those nearing retirement. Immediate annuities start paying out almost immediately, so they are generally intended for those who need an income stream soon after purchasing. Can you buy an annuity at 55? Yes, you can buy an annuity at 55.
How many years can you buy an annuity?
You can usually choose between 1 and 30 years, up to a maximum age of 100 (so for example, if you buy an annuity when you’re 90, you can only guarantee 10 years of payments). Should an elderly person buy an annuity?
Can a 90 year old get an annuity?
While many annuities have upper age limits around 85, some products and companies may offer options up to age 90 or beyond, albeit with different terms.
At what age can you no longer buy an annuity?
Most annuity providers also establish an upper age limit, typically ranging between 75 and 95.
How much will a $100,000 annuity pay monthly?
What happens to an annuity at age 95?
Most annuity contracts set a deadline for deciding whether to annuitize, usually around age 95. If you pass the deadline, the annuity typically annuitizes automatically.
