Final answer:
An individual annuity is not suitable as a short term savings account due to its long-term nature and penalties for early withdrawal. It is designed for tax deferred savings, serving as a retirement income vehicle, and is part of private market retirement planning options.
Step-by-step explanation:
An individual annuity serves the purpose of securing income for retirement, among other long-term financial strategies. It is designed as a means for tax deferred savings, to accumulate wealth over an extended period that can then be used to provide a steady income stream in retirement. This makes options such as an Individual Retirement Account (Qualified) or generating retirement income suitable uses for an annuity.
However, annuities are not generally suitable for short term savings due to their long-term nature and possible surrender charges for early withdrawal. They are, instead, investment vehicles that benefit from compound interest over more extended periods and are a part of private market options for retirement planning.
Thus, to answer the question, an individual annuity may serve any of the following purposes, EXCEPT a short term savings account. Saving for old age often involves contributions to accounts with special tax treatments like 401(k)s and IRAs, where funds can grow tax-deferred and are intended for use in retirement, not as a liquid asset for immediate needs.