Asked on 11 Jul 2020
At older age also less risk should be taken and new savings can channel from investing towards annuities.
As always, the earlier the better. This is because we have the power to make use of compound interest to work for us. Generally, this means that we can reach the same goal with a lesser capital outlay, due to a longer accumulation time period.
Moreover, it is always good to have a balanced portfolio. At the end of the day, investment yields only non-guaranteed returns. Therefore, a guaranteed step-up annuity will become a strong cushion for you to fall back on.
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The value of annuities is in the guaranteed cash flow.
Any time is good to buy for retirement.
To achieve the same level of retirement payout, starting later will definitely cost more than if you start earlier.
I get where you are coming from too, from a time value of money perspective.
There is no right or wrong. You will need to weigh against the risk you are undertaking in investments, while factoring in the opportunity cost of using the funds for investment or annuities.
Annuities are great to provide for income and capital preservation. So that isn't an age specific trigger or reason but instead for anyone who wants the above considerations.
This means someone 30 that is planning to be financial independent from income generation from his assets can use annuities, and a 60 year old who wants to make sure he can't lose his capital can also use annuities.
What I can say is that if you're using it for income, there's little capital growth, thus if you still want compounded growth, annuities may not be the best option, and if you have a very long term horizon and don't want inflation decay, annuities also wouldn't be too useful as the money would be worth less and less unless reinvested.