How Do Annuities Work? 
That is a great question ! To put it very simply : you put a sum of money into an account that can not be touched for a number of years . While it is stashed away , it is generating interest at an agreed upon rate . After a set number of years , the annuity begins to pay out an agreed upon sum , for an agreed upon period of time . That is a very simple explanation , and there are annuities that differ from how I described it , but that is your basic annuity in a nutshell . They are a way to structure steady payments to supplement an income in your retirement . If you have problems with cash flow , or do n't have a good sum to invest , this may not be a good way to go for you . But if you can set aside a chunk for awhile , there are some really good annuities out there that can be a very good part of a retirement plan . I hope that helps , thanks for asking ! 