How Do Income Annuities Work? 
Income annuities are usually purchased with a lump sum of money around retirement age . They are annuitized immediately , which means that the retired annuity holders start receiving monthly payments to supplement whatever other income they started receiving at retirement -LRB- Social Security , pensions , etc -RRB- . The payments from an annuity can be fixed or they can be variable , depending on the type of annuity purchased . 