In such a case, a retiree withdraws all of the money he/she has saved during working life in, for example, an Individual Retirement Account (IRA), and uses some or all of the money to buy an annuity whose payments will replace the retiree's wage payments for the rest of his/her life.
In such a scenario, an individual who has retired withdraws all of their accumulated funds from an Individual Retirement Account (IRA) and uses some or all of it to purchase an annuity that will provide financial support in the form of regular payments throughout the remainder of their life.