Annuity Income Guide: How Much Will You Get in Retirement?

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By Rebecca Goodman | Published - 7 Apr 2026

Disclaimer

This article is for general guidance only and is not financial or professional advice. It contains promotional content and links to financial products. All figures and information in this article are correct at the time of publishing. Laws, entitlements, tax treatments and allowances may change in the future. Before you make any decisions, you should get independent professional advice.

Annuities have been rising in popularity again, thanks to better rates.

They dipped in popularity after the introduction of pension freedoms in 2015, giving people more choice with their pension savings. But now returns are better, in part because of world economic events.

How much income could you get from an annuity? Find out in our annuity cost guide below.

What’s on this page?

What is an annuity rate? 
How much income could I get?
How much will an annuity cost me? 
When is the best time to buy an annuity? 
Are annuities good value?

What is an annuity rate? 

An a nnuity pays you a guaranteed income for life, and can then continue to pay money out to a partner or beneficiary if you choose this option at the outset.

The “annuity rate” shows the guaranteed income you’ll get each year should you take out the annuity. 

Rates are usually expressed as a percentage. A rate of 5%, for example, on a pension pot of £100,000, would result in an income of £5,000 a year. If it was a rate of 10%, you’d receive £10,000 a year. 

How much income could I get?  

As of 6 April 2026, a typical income for a 65-year-old with a £100,000 pension pot is 6.99%. Many different things influence the rate an individual is given.

Quotes are also given before tax. Annuity income may be taxable if your total annual income (including any state pension) is above the income tax threshold of £12,570.

We explain more here about how lifetime annuities work.

The income you get from an annuity will depend on your own health, age and the options you choose. The following will all be considered when the calculations are made.

Annuity rates are not the same as savings rates, and they shouldn’t be directly compared.

Interest rates and gilt yields 

Annuity rates are directly linked to interest rates and in particular to gilt yields (in other words, the income from government bonds). When these rise, annuity rates are typically pushed up, giving holders a higher income.   

If you buy an annuity in a period of high interest and gilt yield, you’ll receive more than if these are low at the time of purchase.

Currently, interest rates are relatively high. And recent uncertainties in economic and world events have had the effect of increasing yields on gilts. Last month UK gilt yields reached an 18-year high.

Age

The amount you’ll receive through your annuity will be higher the older you are. That’s because a provider expects to pay the income for fewer years.

For example, a 65-year-old will receive less every year than a 75-year-old  with the same £100,000 pension pot to start with. 

Health

You are likely to receive a higher income, also known as an enhanced annuity, if you have poor health such as an existing medical condition, or if you smoke. This is because your life expectancy will be lower than a person in good health or who doesn’t smoke.   

It’s essential to be clear and honest with your provider when you apply for the annuity so it can accurately calculate your annuity rate.    

The level of cover and the options you add

Basic annuities pay out a guaranteed income for an individual until they die. But they aren’t the only option.

You could also choose an annuity that pays an income to a surviving spouse, and/or one linked to inflation, so that your income increases as the cost of living rises.

Many annuities come with a standard guarantee period, such as a year, meaning that if you die within that period, a person of your choice will receive your annuity payments for the rest of that period. You can choose a longer guarantee period, such as five or ten years.

Any of these additional options are likely to cost significantly more.

Your provider

It’s crucial to shop around for annuities because prices can vary.

David Little, financial planning partner at wealth management firm Evelyn Partners, says because annuities are back in favour again, more providers are entering the marketplace. “Shopping around is key – the difference in income between providers can be huge,” he adds.

Mature diverse couple sitting on a sofa looking at a silver laptop — Image credit: Shutterstock / Dmytro Zinkevych

How much will an annuity cost me? 

You can use an annuity calculator to give you an idea of the rate and income to expect. There are several of these to use, such as the one from Money Helper.

When looking at potential income from an annuity it’s useful to also work out how much money you’ll need in retirement.

This table shows example income rates for a healthy 65-year-old choosing a single-life, flat-rate annuity that doesn’t rise annually with inflation.

Annuity type	Age 55	Age 60	Age 65	Age 70	Age 75
Single life, level, no guarantee period	£6,569	£6,967	£7,821	£8,541	£9,699
Single life, level, 5 year guarantee	£6,533	£6,942	£7,761	£8,432	£9,452
Single life, inflation-linked (RPI), 5 year guarantee	£4,057	£4,478	£5,392	£6,277	£7,426
Single life, 3% escalation, 5-year guarantee	£4,497	£4,927	£5,891	£6,626	£7,751
Joint life 50%, level, no guarantee	£6,225	£6,631	£7,284	£8,007	£8,814
Joint life 50%, 3% escalation, no guarantee	£4,198	£4,626	£5,271	£6,079	£7,030

Source: Hargreaves Lansdown, as at 6 April 2026

What is an annuity rate? 

The amount of income you receive from an annuity will depend on when you buy it. You’ll receive a higher income the later you leave it, because the insurer expects to pay out for a fewer number of years.

Rachel Vahey, head of public policy for AJ Bell, says the income you could receive also depends on market conditions, especially gilt yields, at that time which influence the annuity rates on offer.

“So, if you don’t need the money immediately, you may want to think about the timing of buying an annuity, perhaps leaving it for later when you are older or when market conditions have changed.”

But if you need guaranteed income now, buying sooner will give you certainty. 

Are annuities worth it? 

The answer to whether an annuity is  worth it is – it depends. For example, on how long you’ll live, as well as whether it’s important to you to have a stable, predictable income.

Annuity rates have risen significantly due to higher interest rates. For some, this could present an attractive opportunity to secure a guaranteed income stream from their pension pot, Little believes.

However, the current higher inflation/higher interest rate climate may reverse in the near future. For the right overall situation, annuities should be considered as part of the overall retirement planning picture. Once a traditional annuity is purchased it cannot be reversed,” he warns. 

It’s worth looking at the pros and cons of annuities if you’re thinking about buying one and speaking to a professional. There is also lots of help and advice available for free from The Money and Pensions Service.

Vahey of AJ Bell adds that although an annuity offers a guaranteed income, it’s not suitable for everyone. Some may prefer more flexibility to increase and reduce their income when they need to. In this case, income drawdown may be more appropriate.

“You may also want to keep their money invested to enjoy any increases in the stock market. For these people, drawdown might be a better solution allowing them to keep their money invested whilst still taking an income or a lump sum when they need it. Remember, an annuity only pays an income, you can’t take a lump sum from it when you need to.”