An annuity is a financial product that provides a series of payments to an individual over a specified period of time, typically in retirement. It is designed to provide a steady income stream for the annuitant.

An individual can purchase an annuity from an insurance company by making a lump sum payment or a series of payments. The insurance company then invests the funds and pays out a stream of income to the annuitant, either immediately or at a later date.

There are several types of annuities, including fixed annuities, variable annuities, indexed annuities, and immediate annuities. Each type has its own features and benefits, so it’s important to choose the one that best fits your retirement goals.

Some of the advantages of annuities include guaranteed income for life, tax-deferred growth, and the ability to customize the payout options to meet your specific needs. Annuities can also provide a sense of financial security in retirement.

While annuities offer many benefits, there are also some drawbacks to consider. These may include fees, surrender charges for early withdrawals, and limited investment options. It’s important to carefully review the terms and conditions of any annuity before purchasing.