Key Takeaways
- An annuity provides a steady stream of income, often for life.
- It can protect retirees from outliving their savings.
- Types include fixed, indexed, immediate and deferred annuities.
An annuity is a contract between you and an insurance company. In exchange for a lump sum or a series of payments, the insurer agrees to pay you a dependable income — either right away or at some point in the future.
For retirees worried about market swings or running out of money, an annuity can act as the guaranteed foundation of a broader retirement plan. Because there are several types, matching the right annuity to your goals is key.