Believe It or Not, Annuities Can Still Make Sense at 80

Let’s get right to the point. You’ve recently turned 80 (congratulations!) and are finally giving serious thought to purchasing an annuity. But you may be wondering: does this still make sense at your age? After all, money in an annuity replaces money that can be used elsewhere, and yes, you might have only a few years left to live.

Is this correct?  The answer: Absolutely not. 

According to the Society of Actuaries, men and women in good health (i.e., fundamentally they don’t have a major chronic disease) at age 80 typically live to 88 to 90 if they are a man and 90 to 92 if they are a woman.  And an annuity – particularly an immediate annuity, which begins lifelong payouts within a month – offers guaranteed, predictable income that cannot be outlived.

Here is the case for buying an annuity – particularly an immediate annuity because of its speedy and lifetime payouts – if you are 80 years old:

• American life expectancy has been rising. This creates more financial risk for retirees, who must make their nest eggs last longer. According to the federal Centers for Disease Control and Prevention and the Social Security Administration, the average American man lives to 83.2 years and the average female to 85.7 years. And if a 65-year-old man is relatively healthy, he is likely to live to 85 to 90.  A 65-year-old woman in the same camp is likely to live to 87 to 92.

• All this reflects advances in medicine and public health, decreased smoking rates, improved surgical procedures, better treatments for chronic disease and enhanced medical care. Since none of this was as advanced in, say, 1990, the average 65-year-old male at that time lived to about 80 and the average woman to 84.

• The age advantage. Annuity payout rates are tied directly to life expectancy. At 80, your shorter expected lifespan means annuity payouts are significantly higher than they would be at 65 or 70. In other words, you get more income for every dollar you put in. 

• Peace of mind. An immediate annuity provides a “personal pension” – a stream of income you cannot outlive regardless of how long you live.  This frees you from the constant worry of depleting your savings. Retirees don’t like spending their nest eggs. They want assurance of a reliable stream of income.

• Reduced investment stress. This tends to impact retirees not just on the spending front but also on the investment front. At age 80, managing a complex investment portfolio, tracking market fluctuations, and making withdrawal decisions can become stressful – especially as cognitive abilities might decline, even if your health is good overall. You may not want to sidestep this altogether, but it would be nice to mitigate this situation.

• Protection against fraud.  Having essential expenses covered by guaranteed annuity payments can also provide a layer of protection against elder fraud because you rely less on actively managing a large, accessible investment portfolio.  According to the AARP and the FBI’s Internet Crime Complaint Center, seniors are disproportionally targeted. Estimates suggest that one in 10 Americans aged 60 and older have experienced some form of financial elder abuse.  According to the FBI, older Americans reported nearly $4.9 billion stolen through financial fraud in 2024, up from $3.4 billion in 2023.  

Making matters worse, crime experts believe elder fraud is significantly underreported.  Reasons for underreporting include embarrassment, fear of losing independence or not even realizing they have been scammed. Criminals target the elder class because they have often accumulated substantial savings and frequently are socially isolated.

Another option for some 80-year-olds is a Qualified Longevity Annuity Contract (QLAC), a type of deferred income annuity that delays Required Minimum Distributions (RMDs) until age 85. This allows you to defer taxes while still securing income you cannot outlive. QLACs don’t require you to be 80 — only under 85 — but the earlier you purchase, the more worthwhile they become.

At least one insurance company, Northwestern Mutual, caps QLACs at age 75. In contrast, some insurers, such as MassMutual and Western & Southern, offer QLACs to prospective customers as old as 83. Yet another insurance company, Pacific Life, opens up QLACs to folks as old as 82. 

These last three companies are outliers and are not recommended. The bottom line: whether through an immediate annuity or, in some cases, a QLAC, 80 is far from too late. For many, it’s the ideal moment to turn savings into guaranteed income and lasting peace of mind.