Am I too young to start an Annuity?

FIREDreamer

I got a JL RPI annuity at 3.8% at age 59/58 in October 2023. Thought the rate was good enough compared to SWR so I could retire worry-free. Used 2/3 of my drawdown pot. The rest is still growing and remains untouched.

Annuity rates are a tad better now due to being a year older and RPI annuity rates have also improved a tad. Still keeping my drawdown pot for now.

OldScientist

Richmmm5645 said:

I am thinking of using a portion of my SIPP (20%) to give me a base income. I am age 62 and i would be in profit if I live later than age 76.

I have spoken to an IFA who mentioned that I am a bit young for an Annuity! I have also seen something like this mentioned before on the net.

Without going deep into figures....is there a right age to get an annuity?

Rich

The short answer is 'no' - there is no right age to buy a lifetime (or fixed term) annuity because it depends on what you are trying to achieve (certainty and simplicity in income?).

Comparisons with drawdown also need to be done fairly. At 62, you have a reasonable probability (roughly 10%) of living another 35 years with a historical 'safe' withdrawal rate of somewhere between 3% and 3.5%. A single life RPI annuity taken at 62yo currently has a payout rate of about 4.4% (joint life, 100% survivor benefits about 3.6%).

Y_am_I_Here

With a Withdrawal Plan of 3.5% and a single life annuity of around 6.5% (at 62)
What are you waiting for?

FIREDreamer

Y_am_I_Here said:

With a Withdrawal Plan of 3.5% and a single life annuity of around 6.5% (at 62)
What are you waiting for?

The argument being - you have won the game so why not take your cards off the table!

Hoenir

Y_am_I_Here said:

With a Withdrawal Plan of 3.5% and a single life annuity of around 6.5% (at 62)
What are you waiting for?

Inflation to fall and stabilise.