What is the primary goal of an annuity?

The primary goal of an annuity is to provide a steady income stream in retirement. Annuities are designed as financial products that allow individuals to accumulate funds for retirement and then convert those savings into a predictable income over a specified period or for the lifetime of the annuitant. This feature is particularly beneficial for retirees who are looking to replace their salary with a stable income, ensuring they can cover living expenses without the variability associated with investment returns.

The steady income stream helps mitigate the risk of outliving one's savings, as it provides financial security and peace of mind during retirement years. Annuities can offer guaranteed payments, which are especially appealing to those concerned about market fluctuations or economic uncertainty. This focus on providing reliable income is what fundamentally differentiates annuities from other investment vehicles.

The other options may reflect certain aspects of financial products but do not capture the primary intention of annuities, which is to provide consistent income, particularly during retirement.