One buy, no undo

A portfolio gets built over decades of contributions you barely notice. An annuity is the reverse, bought in a single transaction at an 18-year high in rates, with no way back once the date is set.

“It is bought in one transaction and cannot be undone”

Nine months, £2,352 better

On Canada Life's benchmark, a healthy 65-year-old with £100,000 bought £4,521 a year in January 2022. By late September the same £100,000 bought £6,873, an extra £2,352 every year for life.

But 2022 was not normal

That gap is the best advertisement for waiting and the worst guide to it. Nobody sitting in January knew what September would pay, and ordinary years do not swing like that.

“Then again, 2022 was not a normal year, and no one knows what will happen in advance.”

A normal year's spread

Which? records the best income £100,000 could buy each month. In 2025 the worst month was February at £7,525 and the best was June at £8,011, with December closing at £7,665. Spread: £486 a year.

The gap you can close

In January 2026 the most generous provider paid £7,649 on £100,000 and the least generous £7,100. Shopping around closes that £549. Nothing closes the gap between one morning's pricing and another's.

“You can close the provider gap by collecting quotes. But you can't close the timing gap.”

Better rate, bigger commitment

Huang, Milevsky and Young ran the problem in 2017. Improve the rate on offer by roughly a tenth, change nothing else, and the share of budget a buyer should commit today jumps from about 5% to about 85%.

“an asymmetric dollar-cost averaging strategy”

The model that never moves

Standard Life's saver buys at 65, 70, 75 and 80 whatever happens. The rate climbs from 6.6% of the pot to 10.0%, every bit of it from getting older, because market pricing in the model never shifts.

“A model in which conditions never change cannot demonstrate the value of spreading purchases across changing conditions.”

The subtraction nobody did

Starting with £150,000, the staged saver has drawn £259,115 by age 90. A single purchase at 65 would have paid £253,775. The difference is £5,340, or 2.1% more income across 25 years.

A fifth less for a decade

Year one pays £8,155 staged against £10,151 outright. Annual payments catch up at 75, the running total not until 88. The drawdown pot is empty by 80, so the flexibility expires eight years before the gain lands.

Waiting is already paid for

An annuity pays more at 80 because the insurer expects fewer years and because buyers who die early subsidise those who live longer. Cash waiting in drawdown takes market risk and earns none of that subsidy.

“The better rate at 80 is what waiting since 65 has already paid for.”

Quotes first, then decide

One argument for staging survives: worsening health lifts the rate, and Which? saw a 65-year-old quoted 6% above standard by Legal and General and 15% by Aviva. Close the provider gap first, then price the insurance.

“Staging is insurance. Sold as anything else, it is a poor deal.”