How Do Retirement Annuities Work? 
A million people wanted an income that they couldnt outlive . They went to an actuary who studied human mortality and determined that for every $ 10,000 they put into a fund , they could draw out a specified amount -LRB- i.e. $ 300/mo . -RRB- and never run out of money . Mortality is fairly predictable and so an insurance company stepped in and announced that they will guarantee these payments . That contract is an annuity . 