Annuity rates have surged to their highest level in 18 years, offering over-60s a significant income boost on top of their state pension. In July 2026, the average rate for a healthy 65-year-old reached 7.75%, up from 7.66% in April, according to the Standard Life Tracker. For a 60-year-old, the rate stands at 7.06%, meaning a £100,000 annuity now yields an average annual payment of £7,060.
Lifetime income expectations rise sharply
The Tracker, developed by Standard Life, monitors current annuity rates across the market for those annuitising at ages 60, 65, and 70. It shows that a healthy 65-year-old male who bought an annuity in July 2026 at 7.75% could expect a total lifetime income of £156,000. For a female of the same age, the expected income is £177,000.
Meanwhile, a healthy 70-year-old purchasing an annuity during the same period could secure a rate of 8.43%. This would provide a total lifetime income of £135,000 for a man and £155,000 for a woman. The data underscores how annuity rates improve with age, meaning those who delay purchasing may benefit from more favourable terms later in retirement.
Payback period shortens dramatically
Pete Cowell, Head of Annuities at Standard Life, commented: “Trying to predict how the market might perform can be difficult and while rates have remained elevated over recent months, planning ahead is key. For many, having some form of guaranteed income in place can provide a critical foundation for covering core living costs, with more flexible options like drawdown used alongside it to help balance certainty with flexibility.”
Cowell added: “At today’s rates, the time it takes to receive back your initial investment has significantly shortened. The payback period for a £100,000 annuity purchase with a rate of around 5% in 2020 would have taken around 20 years to repay. However, with today’s rates closer to 7.75%, that falls to around 13 years, depending on individual circumstances.”
Highest rates since 2008
Annuity rates have reached 7.75%, the highest since August 2008, highlighting a major shift in the retirement income landscape. The Tracker also reveals the total lifetime income from an annuity, showing that while buying earlier can lead to higher total income over time, rates generally improve with age. This means retirees face a trade-off between securing income sooner and waiting for potentially better rates.
For over-60s, this news comes as the DWP state pension remains a separate source of income. The combination of a higher annuity payout and the state pension could provide a more comfortable retirement, though individual circumstances will vary.
