Which of the following individuals would most likely purchase an immediate annuity?

An immediate annuity is designed to begin making periodic payments to an individual soon after a lump sum payment is made. This financial product is often most suitable for individuals who are nearing or have reached retirement age and are looking for a stable income stream.

A retiree having a lump sum to invest is the ideal candidate for purchasing an immediate annuity because once they retire, they typically have a need for consistent cash flow to cover living expenses. By converting a portion of their savings into an immediate annuity, they can ensure a reliable monthly income, which is crucial for maintaining their standard of living without depleting their capital too quickly.

In contrast, a young professional with a new job might be more focused on growth-oriented investments rather than securing immediate income. A parent planning for a child's education may prioritize saving for future costs and would likely choose education-specific funds or savings plans. An investor looking for stock options would typically seek higher-risk, potentially higher-reward investments rather than the guaranteed income that comes with an immediate annuity. Thus, a retiree is more aligned with the purpose and structure of immediate annuities, making them the most likely individual to purchase one.