Annuities are financial products sold by insurance companies that provide a stream of income in exchange for a lump sum payment or a series of payments. They are often used as part of retirement income planning.

Annuities can provide a guaranteed income stream for life, which can help retirees cover their living expenses and ensure they won’t outlive their savings. They can also offer tax-deferred growth and can be structured to provide income immediately or at a later date, depending on the retiree’s needs.

There are several types of annuities, including fixed annuities, variable annuities, and indexed annuities. Fixed annuities offer a guaranteed interest rate, while variable annuities allow the investor to choose from a range of investment options. Indexed annuities offer returns based on the performance of a market index.

Some of the benefits of using annuities in retirement income planning include guaranteed income, tax-deferred growth, and potential for lifetime income. Annuities can also provide protection against market volatility and longevity risk, ensuring that retirees have a stable source of income throughout their retirement years.