Glossary

An annuity is a financial product sold by insurance companies that provides a stream of income to the buyer, typically for retirement purposes. 🏖️

Annuities can be structured in various ways, such as immediate or deferred, fixed or variable. The buyer makes either a lump-sum payment or a series of payments into the annuity, and in return, the insurance company guarantees a steady income stream, either for a fixed period or for the buyer's lifetime.

For example, a retiree might purchase an immediate annuity with a lump-sum payment to receive monthly income for the rest of their life.

Fun fact: Annuities have been around for centuries. 📜 In ancient Rome, annuities were used by the government to provide lifetime incomes for military personnel and their families as a form of pension. Today, annuities remain a popular retirement planning tool for those seeking guaranteed income streams.