Annuity

An annuity is a type of investment product that can provide you with a stream of income in retirement. Essentially, you make a lump sum payment to an insurance company, and in return, they promise to pay you a set amount of money each month, quarter, or year for a specified period of time, or for the rest of your life.

There are several different types of annuities available, each with its own unique features and benefits. Here are some of the most common types:

1. Fixed Annuities: With a fixed annuity, you'll receive a guaranteed rate of return on your investment, and your payments will remain the same throughout the term of the contract.

2. Variable Annuities: Variable annuities allow you to invest your money in a variety of different investment options, such as stocks, bonds, and mutual funds. The return on your investment will vary based on the performance of these underlying investments.

3. Immediate Annuities: Immediate annuities allow you to start receiving payments immediately after making your lump sum payment. These payments can continue for a specified period of time, or for the rest of your life.

4. Deferred Annuities: With a deferred annuity, you make a lump sum payment now, but you don't start receiving payments until a later date, such as when you retire. This allows your investment to grow tax-deferred until you start receiving payments.

Annuities can provide a number of benefits, including a guaranteed stream of income in retirement, tax-deferred growth, and protection against market volatility. However, it's important to carefully consider the costs and fees associated with annuities, as they can be complex and expensive.

If you're considering an annuity as part of your retirement planning, it's important to consult with a financial professional who can help you understand the pros and cons of different annuity options and determine whether an annuity is the right choice for you.

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