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.

Christian Simmons, writer and researcher for RetireGuide
  • Written by
    Christian Simmons

    Christian Simmons

    Financial Writer

    Christian Simmons is a writer for RetireGuide and a member of the Association for Financial Counseling & Planning Education (AFCPE®). He covers Medicare and important retirement topics. Christian is a former winner of a Florida Society of News Editors journalism contest and has written professionally since 2016.

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    Lee Williams
    Lee Williams, senior editor for

    Lee Williams

    Senior Financial Editor

    Lee Williams is a professional writer, editor and content strategist with 10 years of professional experience working for global and nationally recognized brands. He has contributed to Forbes, The Huffington Post, SUCCESS Magazine,, Electric Literature and The Wall Street Journal. His career also includes ghostwriting for Fortune 500 CEOs and published authors.

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    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: April 27, 2023
  • 3 min read time
  • This page features 4 Cited Research Articles
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A qualified expert reviewed the content on this page to ensure it is factually accurate, meets current industry standards and helps readers achieve a better understanding of retirement topics.

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APA Simmons, C. (2023, April 27). Accumulation Period. Retrieved May 20, 2024, from

MLA Simmons, Christian. "Accumulation Period.", 27 Apr 2023,

Chicago Simmons, Christian. "Accumulation Period." Last modified April 27, 2023.

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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: April 27, 2023

4 Cited Research Articles

  1. Rodeck, D. (2021, February 4) What is a Deferred Annuity? Retrieved from
  2. Rodeck, D. (2021, January 6). What is an Immediate Annuity? Retrieved from
  3. National Association of Insurance Commissioners. (2020, September 30) Annuities. Retrieved from
  4. U.S. Securities and Exchange Commission. (n.d.). Variable Annuities. Retrieved from