What is the primary purpose of annuities?

The primary purpose of annuities is to offer a retirement income. Annuities are financial products designed specifically to provide a steady stream of income during retirement. They allow individuals to invest money, which grows tax-deferred over time, and then convert that accumulated amount into regular payments for a specified period or for the remainder of the individual's life. This feature makes annuities a popular choice for retirees seeking financial stability and predictable income in their later years.

While annuities can have other benefits, such as death benefits or opportunities for wealth accumulation, the unique characteristic that distinguishes them is their focus on generating income during retirement. This makes them particularly valuable for individuals looking to ensure they have financial resources to cover living expenses after they have stopped working.