Annuity
A financial product that converts a lump sum into a stream of regular payments.
An annuity is a contract, typically with an insurance company, that pays out a fixed or variable income stream — often for life — in exchange for a lump sum or series of payments upfront. They're one way to convert accumulated retirement savings into guaranteed income, trading flexibility and growth potential for predictability.
Worked Example
Paying $200,000 for an immediate annuity might guarantee roughly $1,100–$1,400 per month for life, depending on age and terms — income that continues regardless of how markets perform.
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