Core Insights - Annuities are commonly used by retirees to simplify income streams, but they involve complex choices regarding types and payment methods [1] Payment Options - Annuity payments can be received as a lump sum, a life option, or a systematic stream of fixed payments on various schedules [2] - Systematic withdrawals provide reliable cash flow but do not guarantee that retirees won't outlive their funds; consulting a financial advisor is recommended for strategy selection [3] Tax Implications - Tax liabilities are consistent regardless of the payment schedule; pre-tax annuity payments are fully taxable, while after-tax annuities only tax gains [4] - Early withdrawals before age 59-1/2 incur a 10% tax penalty, but annuities grow tax-deferred [5] Monthly Payment - Monthly payments are the default option, aligning with retirees' monthly expenses; this approach allows for potential growth of annuity investments by opting for annual payments instead [6] Annual Payment - Annual payments can be deposited in interest-bearing accounts, allowing for smaller withdrawals while generating interest on the remaining funds [8]