What Is an Annuity?

A Simple Guide for Retirees

If you’re getting ready for retirement, you might have heard the word "annuity" thrown around — but what exactly is it, and how can it help you?Let’s keep it simple.

An annuity is a way to turn your savings into steady, reliable income.You invest money with an insurance company, and in return, they promise to pay you a regular check — either for a set number of years or for the rest of your life.

Think of it like creating your own personal pension plan.

Why Retirees Love Annuities

Many people worry about outliving their retirement savings. An annuity helps solve that problem by providing guaranteed income you can count on, no matter how long you live.Here are a few reasons why retirees often choose annuities:

• Guaranteed Income for Life: You’ll know exactly how much you’re getting paid each month.

• Protection Against Market Losses: Unlike stocks or mutual funds, your income from a fixed annuity won’t go down if the market drops.

• Peace of Mind: You don’t have to worry about managing investments once you retire.

• Your savings never disappear:  If you pass away before receiving all the money you placed into your annuity, the remaining balance will be passed on to a beneficiary you choose. It becomes a lasting gift to your loved ones, ensuring your hard-earned savings continue to take care of the people you care about most.

Basic Types of Annuities (Keep It Simple)

There are many types of annuities out there, but here are two of the most common — especially for retirees:

• Immediate Annuity: You put in a lump sum (like from a 401(k) or savings account) and start receiving income right away — often within a month.

• Deferred Annuity: You invest money now and let it grow until you're ready to start taking income later.

Agents at Utah Avenue Insurance can help you figure out which type fits your goals best.

When Might an Annuity Make Sense?

You might want to consider an annuity if:

• You have a 401(k) or IRA you’re rolling over at retirement.

• You have savings sitting in a bank account earning little or no interest.

• You want to create a lifetime income you can’t outlive.

• You prefer stability and guarantees over market risks.

Annuities Are Just One Option

Annuities aren’t right for everyone. They work best as part of a bigger retirement plan, alongside Social Security, pensions, savings, and investments.Talking with a local, licensed agent at Utah Avenue Insurance can help you see how an annuity could fit into your personal retirement picture.

Better coverage — and better retirement planning — starts here.