What is typically the goal of an annuity?

The primary goal of an annuity is to provide regular income payments to the annuitant over a specified period or for the remainder of their life. Annuities are designed as a financial product that converts a lump sum of money into a stream of income, making them particularly beneficial for retirement planning. Individuals often purchase annuities to ensure they have a reliable income source after they stop working, thus helping to manage the risk of outliving their savings.

While options like accumulating cash value or providing a one-time payout can be characteristics of other financial products, the fundamental purpose of an annuity is to deliver consistent payments, which can help stabilize an individual's financial situation during retirement years. Additionally, the provision of regular income payments aligns with the needs of many retirees who seek predictable cash flow for their living expenses.