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LSDefine
Simple English definitions for legal terms
retirement annuity
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A quick definition of retirement annuity:
A retirement annuity is a type of savings account that you can set up with an insurance or investment company to help you save money for when you retire. You put money into the account, and it grows over time. When you retire, you can start taking money out of the account to help you pay for your living expenses. The good thing about a retirement annuity is that you don't have to pay taxes on the money you put into the account until you start taking it out.A more thorough explanation:
A retirement annuity is a type of annuity that provides a fixed income to an individual after they retire. It is a savings account with an insurance or investment company that is established for retirement income. Payments into the account accumulate tax-free, and the account is taxed only when the annuitant withdraws money in retirement.
For example, John contributes $500 per month to his retirement annuity account for 30 years. When he retires, he receives a fixed income from the account every month for the rest of his life. If John dies before he has received all the payments, his designated beneficiary will receive the remaining payments.
Retirement annuities can be fixed or variable. Fixed annuities guarantee fixed payments, either for life or for a specified period. Variable annuities make payments in varying amounts depending on the success of investment strategy.
Overall, retirement annuities provide a reliable source of income for individuals during their retirement years.