How much does an annuity cost and how do I buy one?
Annuities give you a guaranteed retirement income for the rest of your life.
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If you’re looking to purchase an annuity, you’re probably wondering how much they could cost and how you actual buying one. We’ve put together this page to help you.
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If you're new to annuities, we’d recommend starting with our guide to what an annuity is before digging into annuity cost and purchase details.
How much does an annuity cost?
When you’re buying an annuity, you have to spend at least £10,000. How much you might spend beyond that depends on a wide range of factors. The most important ones are:
- Your pension pot size: It goes without saying that the more money you’ve saved up, the more you can spend when you come to buy an annuity.
- How old and healthy you are: As a rule, the older you are the better annuity rate you’ll get. You might also get a better one if you’re facing certain health issues.
- The type of annuity you choose: You’ll get different rates with different products and providers. Any features or benefits you choose might also affect the price you pay.
- Market annuity rates: They affect the deals your provider offers. In general, if they’re higher you’ll get a better deal and if they’re lower you won’t.
Want to learn more about how your annuity is calculated?
You can see our latest annuity rates or use our annuity calculator to explore how much you’d have to spend and what you might get at different ages.
Annuity cost examples
See how much different annuity spends could get you if you:
- buy your annuity when you’re 65
- take your 25% tax-free cash then spend the rest of your pot on an annuity
- want a guaranteed income paid monthly for the rest of your life
- want a 10-year guaranteed minimum payment period
- don’t go for any extra product options or benefits
- are in perfect health
| Your pension pot size | Your tax-free cash lump sum | Your pre-tax annual income for the rest of your life |
| £500,000 | £125,000 | £24,900 |
| £400,000 | £100,000 | £19,920 |
| £300,000 | £75,000 | £15,030 |
| £100,000 | £25,000 | £4,980 |
| £50,000 | £12,500 | £2,410 |
| £30,000 | £7,500 | £1,405 |
We used our annuity calculator to create these buying annuities estimates on 19 November 2025. They’re really just a starting point, to give you a general idea of how much annuities cost and the income you could receive.
You can use our calculator to see how much you could get with other amounts of money, or a larger or smaller pension pot. It will also help you explore how different types of annuity could work for you.
Want to learn more about buying an annuity?
The five steps to buying an annuity
Annuities provide a guaranteed income, but they grow and pay out in different ways. Follow these five steps to find the right plan and secure your retirement income:
FAQs
You can buy an annuity once you’re aged 55 or older. That’s going up to 57 plus after 6 April 2028. You’ll also need at least £10,000 saved to spend on one.
Yes, you can buy an annuity with cash. But that may or may not be a good idea. It depends on a variety of other factors, like where you’ve saved the cash and what else you could do with it. If you’re not sure, we’d recommend chatting with a financial adviser.
Yes, you can buy an annuity with savings. But that may or may not be a good idea. It depends on a variety of other factors, like where your savings are and what else you could do with them. If you’re not sure, we’d recommend chatting with a financial adviser.
Yes, you can buy an annuity without a pension. But that may or may not be a good idea. It depends on a variety of other factors, like where you’ve saved your non-pension cash and what else you could do with it. If you’re not sure, we’d recommend chatting with a financial adviser.
Choose an annuity that supports your broader aims and goals. It’s very important to choose the right one, as you can’t change it once you’ve bought it. If you’re not sure, talk to an adviser.
It depends on your situation and the annuity you choose. You could buy it directly or through an adviser, online or in person. A good starting point is getting a personalised online quote. Again, if you’re not sure what’s best talk to an adviser.
No, you can’t change your annuity once you’ve bought it. But you can opt for annuities that change in a pre-agreed way. For example, you could set up your payments to rise in line with inflation or have them transfer to a loved one after you die.
There’s no right or wrong time for buying an annuity. UK savers probably won’t need the guaranteed income an annuity gives them until they start working part time or stop working entirely. It could be better to wait, because providers usually offer better rates as you grow older.
That’s up to you! You might want the security of a guaranteed income as soon as you’re old enough or you may want to wait a bit for a better deal. If you’re not sure, talk to an adviser.
Your annuity starts paying out for the rest of your life. You can’t make changes to it once it’s up and running, so again it’s very important to be sure you’re choosing the right one.
If you delay buying your annuity, you’ll have to wait longer for your guaranteed income to kick in. But you’ll probably get a better rate when you do buy it. That’s because providers offer older buyers better annuity rates. If you’re not sure when’s best, ask an adviser.
The minimum amount you can spend on an annuity is £10,000 after taking your tax-free cash. If you want to take your 25% tax-free cash out of your pot before you buy your annuity, the minimum amount you’ll need in your pot is £13,333.
Absolutely yes. Different providers will offer different products, rates, features and benefits. You should compare them to make sure you’re choosing the right one for you.
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