An annuity is a contract between you and an insurance company to cover specific goals, such as principal protection, lifetime income, legacy planning or long-term care costs.
With an annuity you can take advantage of when the stock market is up but don’t have the drawback of losing any of your money in the down times. It’s a safe place to put your money when you are getting close or are already in those retirement years when you don’t want the risk of losing your money with investments. An annuity does what no other investment can do. It can provide guaranteed income for the rest of your life no matter how long you live.
Annuities became popular in the U.S. during the Great Depression, when people began to worry about stock market volatility endangering their retirement. Today, with pension plans becoming less common, many retirees are looking toward annuities as an option to replace income streams.