Hi everyone and welcome back to Money Girls Quick and Dirty Tips for a richer life.

I'm Laura Adams. The disappearance of workplace pensions and the volatility in our

financial markets have put annuities in the spotlight as a potential solution for retirees.

In this podcast, I'll cover the basics of annuities in plain English.

In its simplest form, an annuity is an agreement in which you make one or multiple payments in exchange for receiving a set amount of income for a period of time.

They've been around a long time and are commonly used by conservative retirees who want to make sure that they'll have a regular income for the rest of their lives.

Even though annuities are a way to invest money, they're actually an insurance contract,

and therefore are only sold by insurance companies.

Money that's held in an annuity can be invested in three basic ways and are either called fixed, variable, or indexed.

A fixed annuity pays out a fixed rate of return on your money. It's a guaranteed predictable

income stream, no matter what's going on in the financial markets. A variable annuity pays

out a variable rate of return on your money.

The income stream usually has a minimum guaranteed amount, but can increase depending on the

performance of the underlying investments that you select, such as stocks or mutual funds for instance.

And an index denuity pays out a rate of return on your money that's tied to an economic index,

such as the S&P 500.

It's considered a hybrid of the fixed and variable types

because you receive a minimum guaranteed payment,

but can also enjoy a higher return

when there are gains in the broader market.

In addition to annuities having different investment options, there are also a number of different

kinds of annuities. Annuities are classified in a variety of ways and are segmented by features such as the way you pay premiums,

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