Immediate annuities are very straight forward. An immediate annuity is a way to convert at least a portion of your retirement funds into a steady income that lasts as long as you do. Immediate annuities start paying out within thirty days of the lump sum payment, so they are frequently used by people already in retirement. A deferred annuity can also be converted into an immediate annuity.
The prime advantage of an immediate annuity is to prevent retirees from outliving their nest egg. You are guaranteed an income stream for your entire life (or a specific number of years if you choose). Knowing you can count on a guaranteed income stream can be a benefit for retirees. Additionally, the payments can be higher than if you were putting your money into a safe strategy on your own.