What is an annuity & how does it work?

At its most basic level, an annuity is a contract between you and an insurance company that shifts a portion of risk away from you and onto the company. There are 2 basic types of annuities: Income annuities can offer a payout for life or a set period of time in return for a lump-sum investment.

What is an individual retirement annuity?

Individual retirement annuities can provide a steady stream of income to retirees; however, there are limits as to how much can be contributed each year, and annuities typically have higher fees associated with them. An individual retirement annuity is an insurance contract that works much like an individual retirement account or IRA.

Are annuities right for your retirement plan?

Sold by financial services companies, annuities can help reinforce your plan for retirement. Annuity contracts, however, have widely varying terms, and some charge high costs. If you’ve ever wondered what is an annuity, our guide will help you understand the key details so you can decide whether an annuity might be right for your retirement plan.