While there are arguments both for and against the use of annuities for retirement planning, one feature is not arguable. Annuities, like no other investment available, can provide a guaranteed income for the life of the annuitant. Because of this single feature, an annuity can protect you from the financial risk of outliving your assets.

The real question is, how much income will any given annuity provide? The annuitant—the person on whose life the annuity is based—can elect to have his or her payments from a fixed annuity paid out as a fixed dollar amount over his or her lifetime, or may choose any of several other methods of payment. In exchange for this privilege, he or she must first surrender the cash value of the annuity to the insurance company. The amount of resultant monthly or annual income will be determined, to a large degree, by the age of the annuitant, the payout option the annuitant chooses, and the account cash value when surrendered.