Not all annuities are created equal. Learn how to use MYGA, SPIA, and Longevity Annuities differently depending on your age and retirement goals.
Annuities by Age: What to Use and When
There are two main types of annuities:
- 📈 Fixed Annuities: Guarantee your principal, offer interest growth
- 💸 Income Annuities: Provide guaranteed lifetime income
But how and when you use them depends largely on your age, retirement timeline, and risk tolerance. Here’s a breakdown by life stage:
👶 Under Age 50: Focus on Growth, Not Guarantees
Goal: Build retirement assets through growth investments
- ❌ Annuities not recommended at this stage
- 💼 Use: Stock funds, ETFs, and Roth IRAs
- 📉 Why: Annuities offer lower returns and liquidity restrictions
Strategy: Maximize compounding. You have time on your side—use it!
💼 Age 50–65: Time to Lock in Guarantees
Goal: Start protecting your retirement capital and planning for lifetime income
- ✅ MYGA (Multi-Year Guaranteed Annuity): Lock in fixed interest rates
- ✅ Indexed Annuity: Participate in market-linked growth with no downside
- ✅ DIA (Deferred Income Annuity): Begin lifetime income later (e.g., 65 or 70)
🧠 Personal Tip:
Age 55 is often ideal for setting up a DIA that starts income at age 65. It allows 10 years of growth before income begins—creating powerful compounding benefits.
👴 Age 66–75: Turn Assets Into Income
Goal: Secure lifetime income and reduce portfolio risk
- ✅ SPIA (Single Premium Immediate Annuity): Start income right away, guaranteed for life
- ✅ MYGA or Indexed Annuity: Preserve principal while earning safe interest
Strategy: Use SPIA to cover your “income gap” between Social Security and living expenses. Use fixed annuities to avoid bond market volatility.
🧓 Age 76 and Up: Manage Longevity and Liquidity Carefully
Goal: Protect capital, prepare for health-related costs
- ✅ Longevity Annuity (DIA starting at 80–85): Insurance against extreme longevity
- ✅ MYGA: Guaranteed short-term interest for safe money
- ✅ Indexed Annuity: Add conservative growth with principal protection
Caution: Lifetime income annuities like SPIA are less useful after 75 due to shorter time horizon. Use annuities to protect remaining capital and manage health-related spending.
📋 What to Consider Before Choosing an Annuity
- 💰 Your Income Needs: Do you need income now or later?
- 🔒 Liquidity: Can you afford to lock up money for 5–10 years?
- 📈 Market Risk Tolerance: Are you seeking growth or safety?
- 🧾 Tax Impact: Talk to a tax advisor before locking in a contract
- 💸 Fees & Penalties: Understand surrender charges and rider costs
Key Takeaways
- 📌 Under 50: Focus on high-growth investments, not annuities
- 📌 50–65: Use annuities to prepare for safe income and capital protection
- 📌 66–75: Use SPIA for income, MYGA for security
- 📌 76+: Consider longevity protection and asset preservation
