Retirement

Should you buy an annuity?

Quidsmith Guides · Updated 2026-07-03 · 6 min read

From age 50 you can spend a lump sum on an annuity: a guaranteed income paid for the rest of your life, however long that turns out to be. It is the one product in Quidsmith that removes uncertainty entirely, and that certainty is exactly what it sells.

What you are actually buying

An annuity is insurance against living a long time. You hand over capital once, and in return the game pays you a fixed income every year until 100, no matter what markets do. It is a one-off purchase and, importantly, it sits outside your net worth, so it will not show up in your final wealth tier. What it buys is safety, not a bigger number on the win screen.

The wellbeing quirk

The annuity rate is set from your wellbeing and predicted inflation. Because a provider expects a healthier person to live longer, lower wellbeing buys a better rate. It is a slightly grim mechanic, but a real one: a player in poorer health is offered more income per pound.

When it makes sense

• As an income floor. Using part of the pot to annuitise your essential costs means a market crash can never leave you unable to cover the basics. The rest of the portfolio can then take more risk.
• If you fear outliving your money. The great danger of drawdown is a 40-year retirement emptying the pot. An annuity removes that risk for whatever you put into it.
• Later, not too early. Rates tend to improve with age, so buying at 50 usually secures a worse rate than waiting.