Accumulation Period

The accumulation period of an annuity is the phase where you are increasing the cash value of your annuity. After this period is over, your annuity will be either annuitized or cashed out.

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  • Written by Kate Stalter
  • Edited By
    Michael Santiago, CRPC™
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    Michael Santiago, CRPC™

    Senior Financial Editor

    Michael Santiago, a senior financial editor, joined RetireGuide in 2023. With over 10 years of professional writing and editing experience, he brings a wealth of expertise in creating content for diverse industries, including travel and healthcare. Having traveled to more than 40 countries across five continents and lived in Europe and Asia for several years, Michael's global perspective enriches his work. He combines his strong writing skills, editorial judgment and passion for crafting accurate and engrossing content to enhance the user experience on RetireGuide.

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  • Reviewed By
    Ebony J. Howard, CPA
    Ebony J. Howard, CPA

    Ebony J. Howard, CPA

    Credentialed Tax Expert at Intuit

    Ebony J. Howard is a certified public accountant and freelance consultant with a background in accounting, personal finance, and income tax planning and preparation.  She specializes in analyzing financial information in the health care, banking and real estate sectors.

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  • Published: July 22, 2021
  • Updated: May 7, 2025
  • 3 min read time
  • This page features 3 Cited Research Articles
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APA Stalter, K. (2025, May 7). Accumulation Period. RetireGuide.com. Retrieved June 3, 2025, from https://www.retireguide.com/annuities/payout/deferred/accumulation-period/

MLA Stalter, Kate. "Accumulation Period." RetireGuide.com, 7 May 2025, https://www.retireguide.com/annuities/payout/deferred/accumulation-period/.

Chicago Stalter, Kate. "Accumulation Period." RetireGuide.com. Last modified May 7, 2025. https://www.retireguide.com/annuities/payout/deferred/accumulation-period/.

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What Is the Accumulation Period or Phase and Why Does It Matter?

An annuity is an opportunity for you to earn income and set savings over a long-term span. During the accumulation period, you build up your annuity by paying premiums to the insurance company.

This period can last years and provide plenty of time for the overall value of the annuity to build. Your annuity also collects interest over this span which can also increase its value.

There isn’t a set amount of time for the duration of an accumulation phase — it can vary depending on your specific annuity — but the longer the phase, the greater the worth of your annuity.

After the accumulation phase is over, you will either cash out your annuity or annuitize it. This is known as the payout phase since you begin to get money back from your annuity through several payout options.

It would be best if you typically did not plan to make withdrawals during the accumulation phase because this is when you build up the value of your annuity for later use. A withdrawal would be counterproductive.

If you are planning to purchase an annuity that will have an accumulation phase, consider the following:
  • Withdrawals will be limited
  • Accumulation phases are for long-term savings and income
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What Types of Annuities Does This Impact?

According to Forbes, you can steadily add money to your account over time to increase its value in a deferred annuity, then eventually cash out or annuitize your annuity.

You will not have an accumulation phase if you have purchased an immediate annuity. In this type of annuity, your contributed money is immediately annuitized, resulting in you starting to receive payments right away.

Since your payments begin right away as you contribute money, there is no time or reason for an accumulation phase to occur. This also applies to deferred income annuities.

Last Modified: May 7, 2025
Kate Stalter professional headshot
Kate Stalter Financial Writer
Edited By
headshot of Michael Santiago
Michael Santiago, CRPC™ Senior Financial Editor
Financially Reviewed By
Ebony J. Howard, CPA
Ebony J. Howard, CPA Credentialed Tax Expert at Intuit

3 Cited Research Articles

  1. Rodeck, D. (2021, February 4) What is a Deferred Annuity? Retrieved from https://www.forbes.com/advisor/retirement/deferred-annuity/
  2. Rodeck, D. (2021, January 6). What is an Immediate Annuity? Retrieved from https://www.forbes.com/advisor/retirement/immediate-annuity/
  3. U.S. Securities and Exchange Commission. (n.d.). Variable Annuities. Retrieved from https://www.sec.gov/investor/pubs/sec-guide-to-variable-annuities.pdf