An annuity is a financial product that provides a guaranteed stream of income over a specified period of time. There are many types of annuities, but one of the most common is a lifetime income annuity, which pays a fixed amount of income on a regular basis (such as monthly or annually) for the rest of the annuitant’s life.
When you purchase a lifetime income annuity, you typically pay a lump sum of money upfront in exchange for the promise of future income payments. The amount of these payments is determined by factors such as the amount of money you put into the annuity, your age at the time of purchase, and the type of annuity you choose. Some annuities may also offer features such as cost-of-living adjustments or the option to provide income to a surviving spouse.
Lifetime income annuities can be a good option for people who are looking for a stable source of income during retirement. They can provide peace of mind and a sense of financial security, as the income payments are guaranteed and can’t be outlived (assuming the annuity issuer remains financially solvent). However, it’s important to understand that annuities are not without risk – for example, if the annuity issuer goes bankrupt, you may not receive the full amount of your promised income payments. Additionally, annuities can be complex financial products with fees and restrictions that may not be suitable for everyone. It’s always a good idea to speak with a financial professional and carefully consider all of your options before making any financial decisions.