A deferred annuity is a contract where you accumulate money over time before converting it to income. During the accumulation phase, the money grows tax-deferred. At a future date, you can convert the accumulated value to guaranteed income. Fixed, indexed, and variable annuities are all types of deferred annuities.
Key Points
- Deferred annuity: accumulate money over time before converting to income
- Accumulation phase: money grows tax-deferred
- Annuitization: convert accumulated value to guaranteed income
- Fixed, indexed, and variable annuities are all types of deferred annuities
- Best for: people who want to accumulate money for future retirement income