Hitting 50 is weird. One day you’re worrying about your kid’s soccer schedule, and the next, you’re staring at a 401(k) statement wondering if "number go up" is actually a sustainable retirement plan. It isn't. Not forever. I’ve spent the last decade reading every finance blog under the sun, and the general consensus on annuities is usually some variation of "stay away." They’re called expensive, opaque, or just plain boring. But I did it anyway.
I recently bought an annuity at age 50.
It wasn't a snap decision. Honestly, it took about six months of spreadsheet-induced headaches and a few very blunt conversations with a fiduciary. What I realized is that the financial advice given to 30-year-olds—maximize growth, ignore the dips, buy the index—doesn't feel quite as safe when you can literally see the "retirement" finish line from your backyard. When you're 50, you're in the "red zone." Mistakes now cost more because you have less time to fix them.
Why a 50-year-old recently bought an annuity when the market is booming
The stock market has been on a tear, which makes buying insurance for your money feel a little like buying a heavy coat in the middle of a July heatwave. It feels unnecessary until it isn’t. Most people my age are told to shift into bonds. That used to be the gold standard. But if 2022 taught us anything, it’s that bonds can get absolutely hammered right alongside stocks.
I looked at the data. According to the Alliance for Lifetime Income, a huge chunk of Americans are heading toward a "protected income gap." Basically, we have savings, but we don't have a paycheck. Social Security covers some, but for most of us, it’s not enough to maintain a lifestyle that involves more than eating canned soup.
Buying an annuity at 50 is different than buying one at 70. At 70, you’re usually looking for immediate income. At 50, I’m looking for a "pension substitute." I don't have a corporate pension. My employer doesn't promise me a check for life. So, I decided to build my own.
The math changed for me when I stopped looking at an annuity as an investment. It’s not. It’s a transfer of risk. I’m paying a company to take the "what if the market drops 40% the year I retire" risk off my plate. That peace of mind has a price tag, but for me, it’s worth it.
The "Fees" Argument: What actually happened when I looked at the contract
You’ll hear people scream about fees. They aren't wrong, but they often lack nuance. Variable annuities can be absolute fee-monsters, sometimes topping 3% or 4% annually when you add up the mortality charges, administrative fees, and investment sub-account costs.
I stayed away from those.
Instead, I looked at a Fixed Index Annuity (FIA). With an FIA, your principal is protected. If the S&P 500 goes down 20%, you get a 0% return. You don't lose money. If it goes up, you get a portion of that gain, usually capped or subject to a "participation rate."
Is it perfect? No. You’re trading the unlimited "up" for a guaranteed "no down."
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Let’s be real: the insurance company isn't doing this out of the goodness of their heart. They make money on the spread. But for a 50-year-old recently bought an annuity, the goal isn't to beat the S&P 500. The goal is to ensure that $200,000 stays $200,000 (or more) regardless of what happens in Washington or overseas.
I sat down with a copy of the Barron's annual annuity guide and started comparing. I found that if I put a portion of my nest egg into a deferred income structure now, the "payout rate" in 15 years would be significantly higher than if I waited until 65 to start. It’s a longevity play.
The Psychological Shift of the Big 5-0
At 50, your brain changes.
You start doing the "years left" math. If I live to 90, that’s 40 years. If I retire at 65, that’s 25 years of unemployment. That is a long time to rely solely on a volatile brokerage account.
I’ve seen friends lose 30% of their net worth in a matter of months. They panicked. They sold at the bottom. An annuity prevents that "behavioral risk" because there’s nothing to sell. It’s just... there. It’s the "sleep at night" factor.
There's also the "Sequence of Returns Risk." This is a big one that most people ignore until it hits them. If the market crashes right as you start taking withdrawals, your portfolio might never recover. By securing a guaranteed floor now, I’m basically buying an insurance policy against bad timing.
What I Wish I Knew Before Signing the Paperwork
It’s not all sunshine and guaranteed checks. There are some real "gotchas" that I had to navigate.
- Liquidity is a nightmare. Once that money is in, it’s mostly locked up. Most contracts allow you to take out 10% a year, but if you need the whole chunk for a medical emergency? You’re going to get hit with surrender charges that can be as high as 7% to 10% in the first few years.
- The "Caps" change. In a Fixed Index Annuity, the insurance company can often change the participation rate or the cap every year. You’re somewhat at their mercy.
- Inflation is the silent killer. A fixed check for $2,000 a month sounds great today. In 20 years, that $2,000 might buy a lot less groceries. I had to look into "Cost of Living Adjustments" (COLA), which, frankly, make the initial payout look much smaller.
I chose to put about 20% of my total assets into the annuity. Not everything. Never everything. My stocks are for growth; my annuity is for the floor.
Different Flavors of Certainty
Not all annuities are the same, and honestly, the industry does a terrible job of explaining this.
You’ve got Single Premium Immediate Annuities (SPIA). You give them a pile of cash, and they start sending you checks next month. Great for people already retiring.
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Then there are Deferred Income Annuities (DIA). That’s more of what I looked at. You put money in now, and it sits there, growing (sort of), and then starts paying out at a later date.
And then there's the MYGA (Multi-Year Guaranteed Annuity). These are basically the insurance world’s version of a CD. You get a fixed interest rate for a fixed number of years. Right now, with interest rates being higher than they were five years ago, MYGAs are actually looking pretty competitive compared to standard bank products.
I ended up going with a hybrid approach that focuses on "Income Riders." This means I have a base value, but I also have a separate "income account" that grows at a set rate (say 6% or 7% simple interest) specifically for the purpose of calculating my future lifetime checks. It’s complex. It requires a highlighter and a lot of coffee to understand.
Dealing with the "Annuity Hate" from Financial Pros
If you talk to a "fee-only" advisor, they might hate your annuity. Why? Because they can't manage that money and charge you a 1% AUM (Assets Under Management) fee on it.
Conversely, if you talk to an insurance agent, they might want you to put all your money in an annuity. Why? Because the commissions can be massive—sometimes 5% to 8% of the total deposit.
You have to find the middle ground.
I used the FINRA BrokerCheck tool to make sure the person I was talking to didn't have a rap sheet of complaints. I also made sure they were a fiduciary, at least in the capacity of the advice they were giving.
The most important question I asked was: "How much are you getting paid if I buy this?" If they get twitchy, walk away. My guy was upfront about it. He showed me the commission. I respected that.
Is 50 too early?
Some say wait until 60. The logic is that your mortality credits (the extra "juice" insurance companies give you based on life expectancy) are better when you’re older.
But I’m 50. I’ve recently bought an annuity because I want the "compounding" of the income credits to start now. I want to know that if the next decade is a "lost decade" for the stock market—like 2000 to 2010 was—I’m still moving toward my goal.
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Also, let's talk about taxes. Annuities grow tax-deferred. If you’ve already maxed out your 401(k) and IRA, and you still have cash sitting in a taxable brokerage account getting hit with capital gains every year, the annuity can be a decent "tax shelter." It’s not the primary reason to buy one, but it’s a nice side benefit.
Real-World Math: An Illustrative Example
Let's look at a hypothetical scenario to see how this actually functions for someone in my shoes.
Imagine I put $100,000 into a deferred annuity today at age 50. I don't touch it until 65.
If the account has a guaranteed "income base" growth of 6%, that $100,000 isn't actually $100,000 in cash. But for the purpose of my future paycheck, the insurance company "sees" it as roughly $190,000.
When I turn 65, they look at my life expectancy and say, "Okay, we will pay you 5% of that $190,000 every year for the rest of your life." That’s $9,500 a year. Forever.
If I live to 95, I’ve collected $285,000 on a $100,000 "investment."
If I die at 66? Well, that’s where it gets tricky. Depending on the "death benefit" rider, my kids might get the remaining balance, or the insurance company might keep it. I chose the "return of premium" or "beneficiary" option because I don't want my money vanishing into the corporate ether if I get hit by a bus on day two of retirement.
Actionable Steps Before You Buy
If you're hovering around 50 and thinking about this, don't just call the first guy who sends you a dinner invitation in the mail. Those "free steak dinners" are the most expensive meals you'll ever eat.
- Audit your "Guaranteed" vs. "Variable" income. Calculate your projected Social Security. If you have a pension, add that. If those two things cover your basic "mortgage and groceries" costs, you probably don't need an annuity. If there’s a gap, that’s your annuity target.
- Check the AM Best Rating. You are buying a promise. You need to make sure the company making that promise will be around in 30 years. Stick to companies with an A+ or A++ rating.
- Understand the "Surrender Period." Most of the ones I looked at were 7 to 10 years. If you think you’ll need that cash for a beach house in five years, do not buy an annuity.
- Ask for a "Sample Contract." Not the glossy brochure. The actual contract. Read the "Exclusions" and "Limitations" sections. That’s where the real info lives.
- Comparison shop. Use sites like ImmediateAnnuities.com or Cannex to see what the current "going rates" are. Don't just take one person's word for it.
Buying an annuity at 50 isn't about getting rich. It’s about staying rich. It’s a hedge against my own worst impulses and the world’s unpredictability. I’m still heavily invested in tech stocks and index funds, but that annuity is my anchor.
And at 50, I’ve realized that having an anchor is a lot better than drifting and hoping for a fair wind. It's about taking control of the one thing I can actually control: my own floor. It’s not for everyone, but for this 50-year-old, it was the right move at the right time.