What Is The Accumulation Period?

Shawn Plummer

CEO, The Annuity Expert

If you’re looking for a way to save for retirement, you may have encountered the term “accumulation period.” But what is it? How does it work? And when does it start? In this guide, we will answer all of those questions and more!

What Is The Accumulation Period?

An annuity accumulation period is the length of time during which money is deposited into an annuity contract. The accumulation period typically begins when the contract is first funded and ends when withdrawals or payments begin.

During the accumulation period, the money in the annuity grows through interest accrual and investment earnings.

The length of the accumulation period can vary depending on the type of annuity and the specific terms of the contract.

Ultimately, the length of the accumulation period will play a role in determining how much money will be available during retirement. Those with more extended accumulation periods will typically have more money to withdraw or use for payments later on.

As a result, it’s essential to choose an accumulation period that makes sense for your financial needs and goals.

What Is The Accumulation Period

How Long Is The Accumulation Phase Of An Immediate Annuity?

For most immediate annuities, the accumulation phase is 12 months or less.

How Long Is The Accumulation Phase Of A Deferred Annuity?

When you open a deferred annuity, you’re usually in the “accumulation phase.” This is when your money grows tax-deferred (or, in some cases, tax-free). The length of the accumulation phase depends on the type of annuity you have. With most annuities, it’s 12 months or more. 

How Happens After The Required Accumulation Period Of A Deferred Annuity?

After the required accumulation period of a deferred annuity, owners can keep the funds in the annuity to continue to grow, pocket the total annuity’s value in a lump sum, transfer the funds to another investment, or a series of payments.

What Happens If The Annuity Owner Dies During The Accumulation Period?

If the annuity owner dies during the accumulation period, the death benefit will be paid to the designated beneficiary. The death benefit is the money invested in the annuity plus any interest accumulated.

Factors To Consider

There are a few things to keep in mind during the accumulation period:

  • You may be able to take loans against your annuity during this time, but this will reduce the overall value of your contract.
  • The length of the accumulation period will vary depending on your annuity type. Some annuities have shorter accumulation periods than others.
  • If you decide to cash out your annuity before the end of the accumulation period, you may be subject to surrender charges.

Types Of Annuities With An Accumulation Period

Types Of Annuities Without An Accumulation Period

Helpful Tip: If you need a cheap service to set up your entire estate plan, we recommend:

What Is The Accumulation Period?

Next Steps

If you’re still unsure whether or not an annuity is a suitable choice for you, our team of experts can help. We specialize in annuities and can find the perfect option for your needs. Contact us today to get started!

What Is An Accumulation Period In An Annuity?

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Frequently Asked Questions

What is meant by the accumulation period?

Over an accumulation period, investors accumulate savings and build up the worth of their investment portfolio to create retirement funds.

How do you determine accumulation?

The Accumulation Distribution indicator measures the distance between a stock’s closing prices and its upper or lower boundaries, allowing traders to identify whether accumulation or distribution occurs in the market. Then, multiplying this measure with volume helps to validate movements supported by higher trading activity.

What is the accumulation stage of an annuity?

As funds are gradually added to an annuity account, investors accumulate their desired cash value during the Accumulation Phase. After this threshold has been met and the savings have grown, investors can confidently initiate the Annuitization Phase according to plan.

How do you know if a stock is in the accumulation phase?

Expert traders look to pinpoint the ebb and flow of prices and volumes; if a stock appears to be in a vague state without any significant ups or downs, it is likely at its accumulation stage, potentially signaling an imminent upward movement.

*Disclosure: Some of the links in this guide may be affiliate links. I may receive a commission at no cost to you if you purchase a policy. It helps us keep the lights on!

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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