Retirement savings need to provide income after regular employment ends. An annuity is one way to achieve this by converting savings into possible regular payments for the rest of a person's life. Annuities, however, differ in how they pay income, the flexibility they offer, and the risks involved. Understanding these differences will help you decide whether an annuity is suitable for your retirement plan. What Is an Annuity? An annuity is a financial contract between an individual and an insurance company. You pay the insurer a lump sum or make contributions over time, and the insurer pays you income according to the contract. Depending on the arrangement, payments can begin immediately or at a future date. Some annuities provide income for a set number of years, while others pay for the rest of your life. An annuity is designed to provide income rather than hold money like a regular savings account. The main attraction is the possibility of receiving predictable payments, e...