The Cash Flow Clock: For Retirees - Book - Page 81
The Cash Flow Clock
Annuities
We have discussed annuities to a certain extent, but
they deserve their own chapter. Everyone seems to
have an opinion about annuities, but few actually
understand them.
Annuities are investments offered by insurance
companies that are not life insurance. There are
several kinds of annuities, each with different
features, benefits, and drawbacks. There are also two
primary purposes for annuities.
Annuities were first created to generate an income
stream for life. Life insurance can protect us from
dying too soon and leaving a financial void for our
family and loved ones. Annuities can protect us from
living too long (past the time that we have spent all of
our assets) and creating a financial burden for our
family and loved ones.
Employers used to provide annuity payouts (called
pensions) for retirees but those are becoming less
common. The burden of income planning has been
placed on the individual investor. Assets are
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