An annuity comes in many forms, but a simple definition is that an annuity is a contract that converts a sum of money into a series of periodic payments for an agreed upon period of time. An annuity can be thought of as a financial vehicle that converts a pool of money into a stream of income. Annuities are most useful in addressing the financial planning needs of people in or approaching retirement. Annuities are unique in the financial world because they can provide protection against the risk or outliving one’s assets (longevity risk) by guaranteeing income payments in perpetuity or any other selected amount of time. Annuities can be viewed as a type of personal pension plan. Social Security is similar to an annuity in that money contributed over the course of one’s working years is converted into a series of periodic payments that provide income during retirement.
Submitted by tom on
This forum topic is a continuation of a good question/comment that can be found here: http://www.annuitydigest.com/blog/tom/who-really-needs-annuity#comment-182
I am going to place the answer to this question in the discussion forum, and the thread can be found here: http://www.annuitydigest.com/forum/how-get-rid-variable-annuity
Warren Buffett does not need to think about an annuity. While Buffett’s age may qualify him for annuity consideration, his wealth is sufficient to fund any personal income needs that may arise. Also, concerns such as...
