An annuity is a financial product that provides a series of regular payments to an individual over a specific period of time. It is typically used as a retirement income stream or as a way to receive a steady income over a specific period. An annuity can be purchased from an insurance company, and the payments can be made on a fixed or variable schedule.
Annuities are often structured to provide a guaranteed income stream to the individual for the rest of their life or for a specific period. The payments can be made monthly, quarterly, annually, or in a lump sum. The amount of the payments is determined by several factors, including the amount of the initial investment, the age and life expectancy of the individual, and the interest rates at the time of purchase. Annuities can be a useful tool for retirement planning, as they provide a steady income stream and can be tailored to meet the needs of the individual.