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What is an immediate annuity?

An immediate annuity is an insurance product that provides guaranteed income: You give an insurer a chunk of money, and the company gives you a stream of payments that can last for life. The payments begin within 12 months of purchase.

Why should you choose an immediate annuity?

This gives the annuity company more time to invest and grow your money, so your future payments will be larger than you would get with the same initial investment in an immediate annuity. With an immediate annuity, the income payments begin within a year of purchasing the contract, and many start right after you sign up.

Should you buy an immediate annuity?

For retirees who feel they could use additional funds to cover their ongoing expenses or are concerned about outliving their savings, an immediate annuity could be an option. If you don’t have a pension from your company when you retire but need to set up a steady stream of income, you may consider purchasing an immediate annuity.

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