Are annuity rates good right now? Here’s what experts think.

Annuity rates are competitive now amid an overall elevated rate climate. Some providers are currently offering immediate annuity rates above 7% for a 65-year-old, compared to the 4% to 5% range when rates were near historic lows.

But recent Federal Reserve policy changes and inconsistent inflation data have started to create uncertainty about future rate direction. This makes it harder to tell whether the current earnings potential is as good as it’ll get or if we’ll see better opportunities in the future.

If you’re retired or approaching retirement, timing matters because annuities often lock you into yields for years. So, when should you act? Below, fixed-income experts share their insights on whether now is the right time to buy an annuity and why (or if) waiting might serve you better.

Start by seeing how high of an annuity rate you’d be eligible to lock in here.

Are annuity rates good right now?

“The [annuity] rates and income percentages are some of the best that I’ve ever seen,” says Mary Kay Sloan, a financial advisor with Prudential Advisors. Several factors are driving today’s attractive rates, experts say:

• Treasury yields: The 10-year Treasury has risen recently. Since annuity payouts correlate strongly with interest rates, this surge has boosted what providers can offer.
• Fierce competition: Annuity issuers are competing for business while maintaining strong balance sheets.
• Demographics: As more baby boomers retire, demand for guaranteed income products has gone up.
• Product variety: Greater annuity options give companies more flexibility to meet different investor needs and price competitively.

Elle Switzer, director of annuity product management at financial services company TruStage, notes that “for the first time in history, annuities reached $100 billion of sales [every quarter] in 2024 … suggesting that advisors and their clients see the appeal of the current market.”

However, Sloan warns that when interest rates decline, future annuity rates will likely follow. “Annuities will still make sense in a changed market [but] they might not be as generous as they are now,” she says.

Get started with an annuity while rates are still high here today.

Why now could be a favorable time to buy an annuity

“There’s a perfect storm working in favor of [annuity buyers],” Sloan says, with both equity markets and annuity rates elevated. This rare combination allows seniors to lock in high account values from their investments and secure enhanced lifetime guaranteed income.

Demographics and economic realities add to the appeal. “People are living longer,” Paz Rulli, vice president of annuities at Northwestern Mutual, notes. “Add in the uncertainty of fluctuating interest rates, market volatility and other macro uncertainties, and it’s easy to see why now is an excellent time to consider an annuity — a product that mitigates risk.”

Switzer believes that buying now and investing long-term is generally prudent. “Get money off the sidelines and put it to work [rather than] staying invested in cash where you’re likely losing money when you factor in inflation,” she suggests. If you decide to buy, there’s flexibility in how long to commit. For example, with a simple fixed annuity, you can lock in current yields for three to 10 years, depending on where you think rates might head.

When it may be smart to hold off on buying an annuity

Despite today’s favorable rates, annuities aren’t suitable for everyone. “I wouldn’t recommend an annuity if there’s a chance [you’d] need liquidity,” says Sloan. Switzer agrees and adds that your overall financial plan should drive the decision. If an annuity doesn’t solve a need (e.g., protection or lifetime income), even compelling rates may not justify the commitment. Experts suggest holding off or passing in these scenarios:

• Your health is declining, and you may not have a long retirement.
• You already have enough retirement income.
• You don’t have enough money to cover annuity premiums.
• You’re focused on short-term savings goals.
• You lack liquid savings to pay for unforeseen expenses.

The bottom line

Annuity rates may be impressive right now, but that doesn’t mean you should rush to buy one. Before deciding, Switzer recommends asking yourself one key question: “Will the annuity make me feel more confident about my financial situation?” If the answer is yes, that peace of mind may be worth more than trying to time the market perfectly.

If you’re considering an annuity, speak with a financial advisor who can present you options from several carriers. Remember that your choice isn’t just about the rate — an insurance company’s financial strength matters when you’re making a long-term commitment. The right advisor will help you determine whether today’s window of opportunity aligns with your retirement goals.