Annuities

Annuities are contracts where you make a payment or a series of payments in exchange for a payment or stream of payments in the future.

Accumulation period, when the annuity is being funded, and grows tax deferred.

The annuitization period is when the payments begin. The payments don't end until the individual dies.

Surrender period where annuitants cannot make withdrawals without paying a surrender fee. Surrender fees start at 10% and decline over the surrender period.

There are immediate and deferred annuities, immediate annuities begin paying immediately after the lump sum deposit, while the deferred annuity don't begin their payments until a specified age.  Qualifying annuities are IRS approved for use within a retirement plan, there is a 10% penalty for withdrawals before age 59.5. Qualified annuities are funded with pre tax dollars and Non Qualified annuities are funded with post tax dollars. It is designed to be a good way of guaranteeing a source of income during retirement, it is a safeguard against outliving your assets.