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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.
- 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.
- 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 £5,000. 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.
Our ‘How much does an annuity cost?’ video will tell you a bit more about that.
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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.
Buying an annuity
How do I buy an annuity? | Annuities Explained /
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