An annuity is guaranteed income paid at times you set. It is particularly beneficial for those in their retirement years as it can mean financial independence. An annuity can be purchased from a superannuation or life insurance company for a fixed price and the frequency of payment can be set according to individual preferences.
For example…
Mark has just turned 65. After his birthday party, he sat down with his financial planner and decided that buying an annuity would be a good option. So, he bought one from his superannuation fund in exchange for a hundred and fifty thousand dollars. He chose to receive monthly payments and for this option, the payments worked out to be about seven hundred dollars a month.
