The secondary purpose of the annuity penalties is that the bank wants to discourage individuals from removing their money from the account. If the individual removes a large amount of money from the account, the penalty is high and that usually stops people from doing that. Small amounts coming from the annuity is also penalized and a five dollar withdrawal from the annuity is no longer worth it if the penalty is a dollar on that five.



It is beneficial to both the customer and the bank for the individual to leave their money in the annuity rather than pay the penalty for the removal of the annuity. The customer benefits from the money in the annuity by having a steady income before and during retirement. This steady income enables the individual to live a comfortable life without working and reliance on friends or family.



It is important to note that social security was not meant to support an individual through their retirement years. It was designed to assist those who had lost money during the depression make it through their years. The belief that the social security will pay for the retirement is also misfounded. Social security pays out a small amount of money each month and is only applicable for people who have reached retirement age and have worked and those who are disabled. Annuities can be a good way to be able to afford to retire, providing an individual does not risk the annuity penalties and leaves the money in the annuity.