Make sure to read our annuity page.  Annuities can be a confusing topic.  We'll help you sort through the different types.  Most of our retired readers will want to focus on income annuities:

Income Annuities guarantee a specified amount of income each month in exchange for a lump sum payment.  These payments begin immediately and last until death or for some set period of time, typically between 5 and 25 years.

The insurance company pools this money from all the contract holders and pays out each month depending on your age, sex and current interest rates.  The older you are, the bigger the monthly payout. You will get a larger income stream because of shorter life expectancy.  

Your IRA or 401k money can be used to purchase these annuities.  This money which has come from a "qualified" plan will be subject to ordinary income tax as it pays out.  Payments from immediate annuities can be used to cover recurring expenses-such as mortgage payments or long term care insurance premiums or simply to supplement income.

RetirementThink Annuity Information