An annuity is a contract between you and an insurance company. The goal is to provide you with guaranteed income in the future, typically in retirement.
You can purchase an annuity by making a single payment or a series of payments. Either way, the insurer makes payments to you. They can be in the form of one lump-sum payment or a series of payments.
Why would someone hand over money now for the promise of small, but steady payments in the future? It helps offset one of the biggest retirement risks: outliving your money.
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