What Are Annuities and How Can They Help Your Retirement?

Annuities are a great option to consider as part of your retirement plan. They are a contract between you and an insurance company, where the company agrees to make payments to you in the future, either immediately or over a period of time. You can purchase an annuity by making a series of payments or paying a lump sum.

Annuities provide a variety of benefits for retirement income management, including:

• Death benefits: if you pass away before receiving payments, your beneficiary will receive them instead.
• Periodic payments: you can choose to receive payments for the rest of your life, or for the life of your spouse or children.
• Tax-deferred growth: you don’t pay taxes on the investment gains or income from the annuity until you withdraw the funds.

There are three main types of annuities: fixed, variable, and indexed. Many people use annuities to provide a steady stream of income during retirement, and they can be especially helpful in managing living expenses.