What is it?
An annuity is kind of like a pension plan that you fund yourself, usually in the form of a big lump payment. You give up access to this money until a future point, when you can start receiving guaranteed monthly payments until you die.
When is it a good idea?
Because annuities have complicated rules and relatively high costs, most financial planners advise maxing out your 401(k) and IRA deposits before considering them. But if you’re in good health and expect to live a long time, having some funds in an annuity can give you greater peace of mind.
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