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annuity

noun

/əˈnjuːɪti/

IPA:

Dictionary definition of annuity

A fixed stream of payments paid to someone over a predetermined period of time.
"She planned to use her annuity to travel and enjoy her retirement to the fullest."

Detailed meaning of annuity

It is essentially a contract between an individual and a financial institution, in which the latter agrees to make regular payments to the individual, usually on a monthly or annual basis, in exchange for a lump sum payment or a series of payments made by the individual. Annuities are commonly used as a means of retirement income, providing a stable source of funds during one's golden years. They can also be structured to provide guaranteed income for a specified period of time, regardless of how long the individual lives. In this sense, annuities are an attractive option for individuals looking to ensure their financial security in the future.

Example sentences containing annuity

1. After retiring, she received a monthly annuity to support her financially.
2. The lottery winner chose to receive their winnings as a lifelong annuity.
3. An annuity can provide a stable income during one's retirement years.
4. He invested in an annuity to ensure a steady stream of income in the future.
5. An annuity can be a wise financial decision for long-term financial security.
6. The couple purchased an annuity to secure their retirement income.

History and etymology of annuity

The noun 'annuity' has its etymological origins in the Latin word 'annuitas,' derived from 'annus,' which means 'year.' In ancient Rome, 'annuitas' referred to an annual payment or stipend granted for a specific purpose, often as part of a contract or agreement. This concept of yearly payments gradually evolved into the modern financial term 'annuity,' which denotes a fixed stream of payments made at regular intervals, typically annually, to an individual over a predetermined period of time. The etymology of 'annuity' effectively highlights its historical association with periodic payments, emphasizing the annual nature of the original concept and how it has been adapted in contemporary financial contexts.

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Further usage examples of annuity

1. She decided to convert her lump sum payment into an annuity to ensure financial stability.
2. The annuity payments helped cover their living expenses during retirement.
3. The insurance company offered various annuity options to cater to different needs.
4. An annuity can be structured to provide payments for a fixed period or for life.
5. The beneficiary received a monthly annuity following the policyholder's passing.
6. Many people rely on annuities as a reliable source of retirement income.
7. The annuity calculator helped them determine the amount of their monthly payments.
8. An annuity can act as a financial safety net during unexpected circumstances.
9. The pension plan included an annuity option for retiring employees.
10. The financial advisor recommended diversifying investments, including an annuity.
11. He chose an immediate annuity to start receiving payments right away.
12. The annuity provided peace of mind, knowing they had a guaranteed income for life.
13. An annuity can help bridge the income gap for those without a pension plan.
14. Her annuity provides a stable income during retirement.
15. They invested in an annuity for long-term financial security.
16. An annuity can be a smart choice for retirement planning.
17. He receives a monthly annuity from his pension fund.
18. The lottery winner opted for a lump sum instead of an annuity.
19. An annuity can ensure a consistent income after retiring.
20. They decided to purchase an annuity for their child's education.
21. A well-managed annuity can offer peace of mind in old age.
22. She structured her inheritance as an annuity for her heirs.
23. Many retirees rely on an annuity to cover living expenses.
24. Financial advisors recommend diversifying investments, including annuities.