What Is an Annuity and How Can It Help You Plan for Retirement?

By Prince Gandomessi

When most people think about retirement, they think about saving up a big number.

They imagine hitting a goal—$500,000, $1 million, maybe more. Then, when they finally stop working, they plan to live off that money little by little.

But here’s the question: What if the money runs out?

That’s the part most people don’t plan for. They don’t plan to live into their 80s or 90s. They don’t expect inflation, health issues, or a market crash at the wrong time.

That’s where an annuity can help.

Let me break it down in simple terms.

What Is an Annuity?

An annuity is a financial contract. You put in money—either in a lump sum or over time—and in return, you get guaranteed payments later.

Think of it like a paycheck you create for yourself in retirement.

Depending on how it’s set up, that paycheck could last 10 years, 20 years, or even the rest of your life.

That’s the key difference. While other retirement accounts depend on the market or how long your savings last, annuities can offer income that doesn’t run out—no matter how long you live.

Why That Matters More Than Ever

If you’ve ever heard the phrase, “everybody ends up poor,” it’s not just about not saving enough—it’s about not planning the distribution phase.

Most people spend their working years building a retirement account. But when they retire, they face a new problem: how do I make this last?

That’s where the fear kicks in.

• What if the market crashes again?
• What if my healthcare costs explode?
• What if I live longer than expected?
• What if my pension or Social Security isn’t enough?

This fear often forces people to spend less than they should, or worse, work longer than they want to.

An annuity offers a simple answer: guaranteed income. No guesswork. No fear. No wondering if you’ll outlive your money.

How Annuities Work

There are different types of annuities, but here’s the basic idea:

You fund the annuity—either with a lump sum or through payments over time.

Your money grows, sometimes at a fixed rate, sometimes based on an index.

You receive payments later—monthly, quarterly, or annually—for a set period or for life.

You can choose optional benefits, like income for your spouse, or access to funds in emergencies.

Annuities are not investments. They’re insurance contracts. Their purpose isn’t to grow your money fast—it’s to make sure you don’t run out of income when it matters most.

Who Should Consider an Annuity?

If you’re:

Nearing retirement and worried about running out of money

Someone without a pension

A person who values peace of mind and guaranteed income

Looking to protect against outliving your savings

…then it’s worth exploring.

An annuity won’t solve every problem, but for the right person, it can provide a foundation of financial stability in retirement.

Final Thought

Retirement isn’t just about building wealth. It’s about turning that wealth into income that lasts.

If no one has ever explained annuities to you before, now you know they’re more than just a buzzword. They’re a tool—one that helps protect what you’ve worked hard to build.

You deserve a retirement plan that works as long as you do.

Let’s make sure you don’t just retire—but stay retired.