What is a benefit of using an annuity in retirement planning?

Using an annuity in retirement planning offers the significant benefit of providing a predictable income stream for retirees. This feature is particularly valuable for individuals seeking to ensure consistent cash flow during retirement, which can help cover essential living expenses such as housing, healthcare, and daily needs.

The structure of annuities allows retirees to receive scheduled payments over time, which can be tailored to fit their financial needs. Depending on the type of annuity chosen, income can be guaranteed for a specific period or even for the lifetime of the retiree. This predictable income can enhance financial security and peace of mind, enabling retirees to budget more effectively and reduce the stress associated with market volatility and uncertain investment returns.

In contrast to other investment options, annuities prioritize stable, long-term income rather than potential high returns or complex withdrawal options, making them particularly appealing for those looking to maintain financial stability in their later years.