When planning for retirement, one of the biggest worries people share is, “What if I run out of money?” Annuities might be one of the tools that help answer that question. They aren’t the solution for everyone, but for many people, they can play an important role in creating a sense of security.

What an Annuity Really Is

At the simplest level, an annuity is a contract with an insurance company. You contribute money, and in exchange, the company provides income later — sometimes for a set number of years, sometimes for life. For those who want stability, this kind of guaranteed stream might be reassuring.

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Why Income Matters in Retirement

Markets rise and fall. Savings accounts might not always keep pace with inflation. But essential expenses — food, housing, healthcare — don’t go away. An annuity could act like a personal pension, making sure there’s a base level of income to cover these needs no matter what happens in the markets.

For John and Mary, both in their early 60s, this was important. They didn’t want every grocery bill or utility payment tied to the ups and downs of the stock market. By setting up an annuity to cover their essential expenses, they left their investment portfolio to cover extras, such as travel, hobbies, or helping their grandchildren with college.

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Flexibility in Design

What’s less talked about is the flexibility that comes with annuities. You don’t necessarily have to put all your savings into one. Some people annuitize a portion now, and then wait a few years before deciding on more. Others might choose a joint option that provides for a spouse. These choices allow annuities to adapt to different life situations.

For example, David, a single retiree, wanted to keep his options open. He purchased an annuity for just part of his retirement savings, enough to cover rent and insurance. The rest he kept invested. This way, he enjoys predictable income but still has money working in the market.

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Peace of Mind vs. Growth

For those who are worried about outliving their savings, annuities might be worth considering. They don’t promise the highest returns, but they do promise predictability. And for many retirees, that balance — knowing the basics are covered while letting other investments handle growth — could be the right mix.

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Putting It All Together

Annuities are not meant to replace every part of a retirement plan. Instead, they might complement Social Security, pensions, and personal investments. Think of them as one leg of a stool: without it, the stool might wobble; with it, you may feel steadier.

The truth is this: annuities are not magic, but they might be a practical way to reduce financial stress in retirement. By guaranteeing a stream of income, they give you the space to use the rest of your savings with more confidence — whether that means traveling, supporting family, or simply enjoying everyday life without worry.