Discussion

What is an annuity, and is it a good investment?

Why would someone choose to take their retirement money as an annuity instead of taking it all at once when they retire?

Annuities are contracts between you and an insurance company, and despite all the ignorant responses about how evil they are, they’re excellent tools, when used properly. Annuities provide three things: Guaranteed protection of principal (fixed, or fixed indexed annuities do this, NOT variable annuities - variable annuities are investments.) Guaranteed growth. Guaranteed income.

There are various types of annuities, but essentially, they are an investment with an insurance component. You purchase an annuity and then receive periodic payments either for life or for a specific term. In this arrangement, you’re hoping to live long enough to receive more in payments than what you originally paid. The annuity company, on the other hand, is betting that you won’t.