Annuities range from being simple to incredibly complex and as an investor it is your responsibility to learn what you may be buying. The simplest form of an annuity is when you give an insurance company a lump sum and then they provide you with an income stream for a period certain (or life), this is known as a Single Premium Immediate Annuity. The more complex products are deferred annuities and usually are variable or indexed based.
As the baby boomers get older and older it is almost impossible to pick up a financial publication that doesn’t discuss turning one’s nest egg into a stream of income. It has been a while since I explained both an immediate annuity and deferred annuities, but basically they are financial products that turn a sum certain into a stream of payments. I personally think they have a place in almost every retirees situation to some extent, but have such a bad connotation that they aren’t used enough. I can’t believe it took this long, but two finance professors have asked the question [...]