Annuity rates rise with age, and the reason is arithmetic rather than generosity. An insurer buying your pot expects to make payments for the rest of your life, so the older you are when you buy, the fewer payments it expects to make, and the more it can afford to pay each year from the same capital.
What the rate is really measuring
Each payment is part investment return and part the return of your own capital, spread across your expected remaining lifetime. Shorten that expectation and each annual instalment gets bigger, because the same pot is being divided into fewer pieces. That is the whole mechanism. It also explains why the increase with age accelerates: the change in expected remaining years from sixty five to seventy is larger in proportional terms than the change from sixty to sixty five, so the later steps move the rate more.
Why a higher rate later is not simply better
Waiting to get a better rate means going without the income in the meantime, and that forgone income has to be made up before the higher rate is worth anything. Someone who waits five years starts from behind by five years of payments, and the higher rate has to close that gap before it begins to help. Whether it does depends on how long you then live, which is exactly the thing nobody knows. Waiting is a bet, not an optimisation, and it is worth naming it as one.
What else moves with age
Two things change alongside the rate. Health disclosure becomes more likely to qualify for enhanced terms as conditions accumulate, which can matter more than the age effect itself. And the pot continues to be invested while you wait, so it may be larger or smaller when you come to buy. Both of those interact with the rate, which is why comparing a rate at one age with a rate at another, in isolation, does not answer the question of when to buy.
What this page does not answer
When you personally should buy an annuity depends on your other income, your health, whether anyone depends on you and how much variability your household can absorb. That is a personal recommendation and a regulated activity, and this site does not give one. It explains the mechanism so the trade is visible, and passes an enquiry to an authorised firm where advice is wanted.
Questions people ask about annuity rates by age
Why do annuity rates increase with age?
Because the insurer expects to make fewer payments. The same pot is spread across a shorter expected remaining lifetime, so each annual payment is larger. It reflects arithmetic about expected duration rather than a better deal being offered.
Should I wait to get a better rate?
Waiting forgoes income in the meantime, and the higher rate has to make up that shortfall before it produces any advantage. Whether it does depends on how long you live, so it is a bet rather than an optimisation.
Does the increase with age accelerate?
Generally yes. The proportional change in expected remaining years grows as you get older, so the rate typically moves more between later ages than between earlier ones. The effect is not linear across a decade.
Does health matter more than age?
It can. Enhanced terms for qualifying medical or lifestyle factors sometimes move the income more than several years of age would, and insurers differ widely in what they count, which makes real quotations more informative than any published age table.