Explore commonly used personal finance terms.
An annuity is a financial product that pays out a fixed stream of payments to an individual, primarily used as an income stream for retirees. Annuities are sold by financial institutions and can be classified as either immediate or deferred, depending on when the payments start. There are also fixed, variable, and indexed annuities, each with unique payout structures and investment risks. Annuities can help provide steady income, but some come with high fees or penalties, which investors should consider.
