What income does a £100,000 annuity pay in 2026?
With annuity rates at an 18-year high, £100,000 goes further than it has in a generation. Priced at age 65 in August 2026, a £100,000 pension pot buys a single-life level annuity of about £7,750 a year (£646 a month) at the average rate of 7.75% — and around £8,360 a year (£697 a month) at the best-buy rate of 8.36%. All figures are indicative, August 2026.
Add the full new State Pension of £12,548 (2026/27) and a £100k annuity takes a single person to roughly £20,300 a year of secure income for life. Here's the breakdown by annuity type:
| Annuity type (age 65) | Average rate | Annual income | Monthly income |
|---|---|---|---|
| Single life, level — average | 7.75% | £7,750 | £646 |
| Single life, level — best buy | 8.36% | £8,360 | £697 |
| Joint life (50%), level — average | ~6.75% | £6,750 | £563 |
| Single life, RPI-linked — starting income | ~6.25% | £6,250 | £521 |
The £610-a-year gap between the average and best-buy level rates is why the open market option exists: your own provider's quote is rarely the best available. Comparing across the market via our best annuity rates guide costs nothing and the difference compounds over a 25-year retirement to more than £15,000.
£100k annuity income at different ages
| Age when you buy | Indicative single-life level rate | Income from £100,000 |
|---|---|---|
| 55 | ~6.6% | ~£6,600/yr |
| 60 | ~6.9% | ~£6,900/yr |
| 65 | ~7.75% | ~£7,750/yr |
| 70 | ~8.8% | ~£8,800/yr |
| 75 | ~10.3% | ~£10,300/yr |
Buying at 55 rather than 65 costs you over £1,100 a year of income for life, because the insurer expects to pay you for a decade longer. The full picture is in our annuity rates by age table.
Tax-free cash first, or annuitise the lot?
You can usually take 25% of the pot — £25,000 — completely tax free, then buy the annuity with the remaining £75,000. At the average 7.75% rate that gives about £5,813 a year plus £25,000 in your pocket. Annuitising the full £100,000 gives the larger £7,750 income but no lump sum.
Tax works in your favour at this level in one sense: annuity income is taxable, and with a full State Pension using up almost all of the £12,570 Personal Allowance, a £7,750 annuity is essentially all taxed at basic rate — about £6,200 a year after 20% tax. Nothing reaches the higher-rate band on these numbers.
What are the alternatives to an annuity with £100k?
- Drawdown. Take £25,000 tax-free, keep £75,000 invested, draw about £3,000 a year at a cautious 4% rate. Flexible, inheritable, but not guaranteed — and £3,000 is well under half the annuity's £7,750. The trade-offs are covered in drawdown vs annuity with £100k.
- A fixed-term annuity. Guarantees income for a set period (say 5 or 10 years) with a lump sum back at the end, keeping your options open — useful if you think rates or your health may change. See our fixed-term annuity calculator.
- A blend. Annuitise part of the pot to cover essentials and leave the rest invested.
A pre-purchase checklist for £100k buyers
- Get your State Pension forecast first — it tells you how much guaranteed income the annuity actually needs to add.
- Dig out old policy documents. Pensions written decades ago sometimes carry guaranteed annuity rates far above today's market; annuitising elsewhere would throw that value away.
- Decide the shape before comparing prices — level or escalating, single or joint, guarantee period or not — so every quote answers the same question.
- Complete the health and lifestyle questionnaire in full, however healthy you feel.
- Get whole-of-market quotes, not just your provider's figure.
Level or escalating: what the choice costs on £100k
A level annuity's £7,750 looks unbeatable next to an RPI-linked start of £6,250 — a £1,500-a-year head start. But play it forward. If inflation averaged 3%, prices would roughly double over 24 years, so the level income's real buying power would halve by your late 80s while the linked income held steady. The crossover point where the escalating income overtakes the level one in cash terms typically lands 10–15 years in; the crossover in cumulative payments comes later still, often around 20 years. That's why healthy 65-year-olds with longevity in the family lean toward escalation, while buyers prioritising the early, active retirement years — or who have inflation protection elsewhere, like the triple-locked State Pension — often take level income deliberately and spend the difference while they can enjoy it.
If £100k isn't your only pension
Many people with a £100,000 pot also hold smaller pensions from old jobs. Two points before you annuitise anything. First, quotes generally improve with size, so consolidating scattered pots into one annuity purchase can earn a better rate than annuitising them piecemeal — though check for exit penalties and, crucially, for any guaranteed annuity rates on older policies, which can dwarf even today's open-market pricing. Second, genuinely tiny pots may be better taken under the small-pots rules than folded into an annuity at all. Sequencing which pot does which job is exactly the kind of untangling an FCA-regulated adviser does daily.
Making £100,000 stretch further
Three levers matter most at this pot size. First, shop around — the best-buy rate adds £610 a year over the average. Second, disclose your health honestly: smokers and people with conditions like diabetes or high blood pressure often qualify for enhanced rates that pay substantially more. Third, get the shape right before you sign: level vs inflation-linked, single vs joint, and any guarantee period all change the price, and the decision cannot be undone. If your pot is larger, see what £250k or £500k would buy instead — and for a personalised comparison across every option, an FCA-regulated adviser can model your exact numbers.