When should you buy a pension annuity? Timing and age

The payout on a pension annuity rises with age — so there's a real question of when, not just whether. Buy too early and you lock in a smaller check; wait too long and you carry market and longevity risk yourself for extra years. Here's the honest framework.

Why older = bigger check

The insurer prices your income on how many years it expects to pay. At 65 it plans for more years than at 72, so the monthly check at 72 is meaningfully larger for the same deposit. Waiting also lets the money you'll eventually convert keep earning in the meantime.

The case for not waiting too long

Every year you delay is a year you're personally exposed to the two risks the annuity removes: a market crash hitting your savings, and the uncertainty of a long life. If those savings are the money meant to pay your bills for life, carrying that risk longer than necessary can cost more than the higher payout is worth.

A common sweet spot

Many people convert a portion in their mid-to-late 60s or early 70s — old enough that payouts are attractive, early enough to lock in a guaranteed floor before the risky years. It's rarely all-or-nothing: some buy in stages, converting slices over a few years to average out interest rates. The right timing depends on your health, other income, and how much certainty you want — worth talking through with a licensed professional.