An annuity provides different features that make it a useful retirement planning tool. But what is an annuity and how does it work? An annuity is a contract issued by an insurance company that provides tax-deferred growth potential. Annuities allow you to save money for retirement. You can do this by either paying a single payment or scheduled payments over time. These payments then earn interest and after a certain amount of time, provide you with guaranteed* income for as long as you need.
Annuities turn the money you invest into an income stream you cannot outlive. This means that no matter how long you live, you can always depend on an annuity for income.
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