Question

Jay, a single taxpayer, purchased an annuity to help provide income during his retirement. What is the purpose of purchasing an annuity?

1) To receive regular payments in retirement
2) To save money for emergencies
3) To pay off debts
4) To invest in the stock market

Answer 1

The purpose of purchasing an annuity is to receive regular payments in retirement. Annuities help provide a stream of income during retirement, giving individuals financial security and stability.

Step-by-step explanation:

The purpose of purchasing an annuity is 1) to receive regular payments in retirement.

An annuity is a contract between an individual and an insurance company where the individual makes either a lump sum payment or a series of payments in exchange for guaranteed income in the future.

This income can be received as regular payments or as a lump sum. Annuities help provide a stream of income during retirement, giving individuals financial security and stability.