What Is an Annuity?
An annuity is a financial product that provides a series of payments made at equal intervals, commonly used for retirement income.
Key Takeaways
- Definition: A series of equal payments at regular intervals.
- Purpose: To provide a steady income stream, often for retirees.
- Types: Immediate annuities, deferred annuities, fixed annuities, and variable annuities.
Types of Annuities
- Immediate Annuity: Payments start almost immediately after a lump sum is paid.
- Deferred Annuity: Payments begin at a future date.
- Fixed Annuity: Provides regular, guaranteed payments.
- Variable Annuity: Payments vary based on investment performance.
Importance of Annuities
Annuities provide financial security and a reliable income stream, helping individuals manage retirement funds effectively.
