Understanding Deferred Annuity
Deferred annuity is a financial product that provides a series of payments over a specified period after an initial investment or multiple contributions. Here’s a detailed overview of what deferred annuity entails:
How Does Deferred Annuity Work?
When you invest in a deferred annuity, you make a lump sum payment or regular contributions to the annuity provider. In return, the provider promises to pay you a regular stream of income at a future date or for a specified period.
Types of Deferred Annuities
- Fixed Deferred Annuity
- Variable Deferred Annuity
- Indexed Deferred Annuity
Benefits of Deferred Annuity
- Guaranteed income in retirement
- Tax-deferred growth
- Flexible payment options
Case Study: John’s Deferred Annuity
John invested $100,000 in a fixed deferred annuity at age 55. The annuity promised to pay him $500 per month for 20 years starting at age 65. John received $120,000 over the 20-year period, earning a 20% return on his investment.
Statistics on Deferred Annuities
According to a recent study, 45% of Americans have no retirement savings, making deferred annuities a popular choice for retirement planning.
