An annuity is a financial product that provides a steady income stream, typically used for retirement. It is purchased with a lump sum or through a series of payments. Annuities can be structured in various ways to meet individual financial goals.

Annuities work by converting your investment into a series of payments over time. You can choose to receive payments immediately or defer them to a later date. The terms depend on the type of annuity you select.

There are several types of annuities, including fixed, variable, and indexed annuities. Each type has its own features and benefits tailored to different financial needs. Understanding these differences can help you choose the right option.

Annuities are generally considered safe investments, especially fixed annuities, which guarantee a return. However, variable annuities carry investment risks similar to stocks and bonds. It’s important to assess your risk tolerance before investing.

Annuities may come with various fees, including surrender charges, management fees, and mortality and expense risk charges. These fees can impact your overall returns, so it’s essential to review them carefully. Always ask for a detailed breakdown before investing.