Can a 90-Year-Old Buy an Annuity? Understanding the Considerations and Benefits

I’m so happy you came along for the ongoing series on how to purchase an annuity. I know this isn’t a sales pitch, bad dinner seminar, or an unveiling. We’re answering a lot of questions, so we’re doing a series on how to purchase an annuity. What age is too young or too old to purchase an annuity is the topic of discussion for today.

This is a really good question, and I hope that a lot of agents and advisors are seeing this since they need to know. Since many annuities are positioned incorrectly—either with someone too young or someone too old—we However, I’ll share with you my interpretation of what that means—that is, what is too young and too old.

Navigating the world of financial products can be challenging, especially when it comes to complex options like annuities. For individuals nearing or already in their golden years, the question of whether an annuity is a suitable investment option often arises. This article delves into the specific considerations for a 90-year-old contemplating an annuity purchase, exploring the potential benefits and drawbacks to help you make an informed decision.

Age Limits for Annuities: A Closer Look

While there are no federal regulations dictating minimum or maximum age limits for annuity purchases, individual insurance companies establish their own policies. 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.

Real-World Scenario: A 90-Year-Old’s Annuity Purchase

Let’s examine a real-world scenario where a 90-year-old individual is considering an annuity. The individual’s bank executive suggests an annuity as a means to increase the yield from a certificate of deposit (CD). However, concerns arise about whether this is a wise decision given the individual’s advanced age and the desire to avoid probate upon their passing.

Evaluating the Suitability of an Annuity for a 90-Year-Old

To determine if an annuity is a suitable investment for a 90-year-old, it’s essential to carefully analyze the specific terms of the annuity contract. Here are key questions to ask the insurance company:

1. Current and Guaranteed Minimum Interest Rates:

  • What is the current interest rate offered on the annuity?
  • What is the guaranteed minimum rate in future years?

A minimum rate of at least 3% is generally recommended. Additionally, the company should have a strong renewal rate history if the contract’s rate isn’t guaranteed for its entire term. Request a copy of their renewal rate history to assess how they’ve treated policyholders in the past.

2. Market Value Adjustment (MVA):

  • Does the annuity contract include an MVA or excess interest adjustment?
  • Is the MVA waived at death?

MVAs can be advantageous if rates are historically lower than when the contract was purchased. However, they can also be negative if rates are higher. Ensure that the company waives any negative MVA upon the owner’s death. Most companies will pass along a positive MVA to the heirs.

3. Surrender Charges at Death:

  • Are surrender charges waived at death?
  • Is the interest rate pro-rated so that heirs receive 100% of the earned interest penalty-free?
  • Are there nursing home and medical bailouts available?

These provisions ensure that the heirs receive the full benefits of the annuity without incurring penalties if the owner becomes ill and requires specialized care.

4. Owner and Annuitant:

  • Is the owner also the annuitant?

If an heir is named as the annuitant, some insurance companies may not allow owners and annuitants over a certain age. This could mean that the annuity won’t be available without penalty upon the owner’s death.

5. Annual Free Withdrawal Amount:

  • What is the annual free withdrawal amount?

Most insurance companies allow for a 10% free withdrawal. However, some plans may have low or no free withdrawals during the surrender period. 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.

Benefits of Annuities for a 90-Year-Old

If the terms of the annuity contract meet the criteria outlined above, there are several potential benefits for a 90-year-old:

  • Increased Income: Annuities can provide a guaranteed stream of income, which can be especially valuable for retirees who may have limited income sources.
  • Protection from Market Volatility: Annuities are not directly tied to the stock market, offering protection from market fluctuations that could erode retirement savings.
  • Tax-Deferred Growth: The earnings on an annuity grow tax-deferred, meaning taxes are not paid until the money is withdrawn.
  • Probate Avoidance: Annuities pass directly to beneficiaries, bypassing the probate process, which can save time and money.

While annuities can offer valuable benefits for individuals of all ages, careful consideration is crucial for a 90-year-old contemplating such an investment. By thoroughly evaluating the contract terms, understanding the potential benefits and drawbacks, and consulting with a financial professional, individuals can make an informed decision about whether an annuity is the right choice for their specific financial situation.

When You Are Young

What is the age at which something is too young, too old, etc.? Let’s start with the former. People in their 20s, 30s, and 40s call me frequently with questions regarding annuities. Ironically, or perhaps more accurately, tragically, most calls are from people trying to sell an annuity of any kind to people who are 20 years old, 30 years old, or 40 years old. I ask them how old they are, and they respond, “Well, I’m 35, or I’m 37, or I’m 40,” or something like that.

Heres the bottom line. Annuities of any kind are not something you should seriously consider if you are under 50 years old. Let me give you the reasons why. Let’s say you are considering an income writer linked to an index annuity or a lifetime income annuity such as a deferred income annuity, single premium immediate annuity, qualified longevity annuity contract, or any combination thereof. Keep in mind that the lifetime income stream is mostly determined by how long you expect to live at the time the payment is made.

Because of your lengthy life expectancy, if you’re young and looking for a guaranteed source of income to start pretty soon, that income amount will be small. You have to look at that. Interest rates are not the primary factor in pricing; rather, the income pricing train is driven by life expectancy. If you’re under 50 and looking for a lifetime income stream, I would rather keep your money in growth components—a growth market strategy that excludes annuities.

Stock market growth annuities should never be bought for that purpose. Although I am aware that many variable annuity salespeople are screaming at screens, a variable annuity has restrictions on the options available. Most of these variable annuities have high fees. If you’re younger than fifty, you have time for market volatility before you can offset losses and other factors. Any kind of annuity should never be purchased by someone under 50. Â.

Heres another reason. The IRS informs us that there is a 10 percent penalty if you withdraw funds from an annuity, such as a fixed index annuity or a multi-year guaranteed annuity, before you turn fifty-nine and a half. Again, you shouldn’t be purchasing any kind of annuity at that age. Though those are one-offs, there are certain circumstances and asterisks that we deal with, such as when there is a child, grandchild, or other individual who has special needs and for whom we must establish a lifetime income stream.

When You Are Older

Now, lets talk about being too old. Annuities can be issued in some types, not all types. That didn’t mean a nine-year-old should be purchasing them as far out as ninety years old. Some product types have cutoffs at age 85. That doesn’t mean you have to buy, but if you’re 80 years of age or older, we should definitely talk. I need to know why you are considering an annuity. Don’t just attend the awful chicken dinner seminar because they are giving away food; instead, consider the contractual issues you are attempting to resolve and the asset’s intended outcome. Always tell yourself to swallow the food rather than the sales pitch if you’re going to do that.

My mom, whos in St. Augustine, Florida, is a professional plate-liker. She attends all of these events, but she doesn’t make any purchases because, in the end, she will either be called for an appointment or asked to attend the bad chicken dinner seminar. “Stan Annuity is my son,” she’ll say, and they’ll go, “Oh my God, you’re his mother.” In the end, I need to talk to you if you’re 80 years of age or older, but it’s okay if you want to eat their food.

I don’t think you’re not a skilled tech, but you are, and you’re probably even more skilled than I am. I need to understand the suitability. I need to understand the appropriateness. I need to understand what youre trying to achieve. These days, it might be a legacy; it might be in-home or long-term care. It might serve as moral defense, or you might require a lifetime income stream to cover any potential gaps in your income. However, I want to stop anyone over 80 from rejecting the sales pitch’s utopia.

How to Buy an Annuity: What age is too old or too young?


What is the oldest age you can buy an annuity?

Some insurance companies will let you purchase an immediate annuity up until age 100. Many immediate annuity buyers fall into the 70s age bracket. The older someone is when they purchase an immediate annuity, the bigger the monthly payout they will receive from the insurance company.

Can I get an annuity at age 90?

Your annuity will pay out for a set period, whether or not you’re still alive. 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?

The bottom line Annuities may make sense to consider for seniors — and that’s especially true for those who are looking to generate a stable income or protect themselves from growing prices.

How much does a $100 000 annuity pay per month?

A $100,000 annuity could pay as much as $608 a month for a 65-year-old woman purchasing an immediate annuity with a lifetime payout. The monthly payout depends on several factors, including the start and duration of payments, as well as the annuitant’s age and gender.

Can you buy an annuity at any age?

(Updated for 2023) Yes, it’s possible to buy an annuity at nearly any age. Usually there are few or no lower age limits. But annuity purchases do have older age limits. These restrictions vary based on annuity type, product, and individual contract rules. Technically, you may be able to buy an annuity for even a child.

Should young people buy annuities after age 80?

The reality is that after age 80, annuity product choices become more limited. That’s just a brutal fact. Even though young people can purchase many types of annuities, they probably shouldn’t buy one. Ironically, this decision comes down to life expectancy as well.

Should you buy an annuity if you’re 65?

In addition, you benefit from the higher payouts that come with buying an annuity at an older age. For example, according to, a 65-year-old man with $200,000 to invest in an annuity, could buy one for $100,000 to generate $493 now in monthly, lifelong income.

What is the best age to start an annuity?

Single Premium Immediate Annuities (SPIAs): The best age to start an annuity, like an immediate annuity, is typically between 70 and 75. Some financial advisors refer to this as the “age 75 rule.” This age range allows for the maximum payout and immediate income to support your retirement.

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