An annuity is a partnership (contract) between you and a trusted insurance company that prepares you for retirement. You have the option to put money into a secure account that accrues interest from the S&P 500 to get you ready for retirement. Fixed annuities are guaranteed to make sure you never run out of money by offering a "zero-floor" plan which allows for your investment to grow with marginal risk. People typically purchase annuities to provide or supplement retirement income they receive from social security, pension benefits, investments and other income sources. You can convert your annuity into a stream of income that can then be paid over a fixed period or for your lifetime or be withdrawn in one lump sum.