What Is the Annuitization Phase?

The annuitization phase of an annuity refers to the period when the owner of an annuity—called the annuitant—begins to receive payments from the annuity investment. Annuities are financial products that pay the recipient a stream of payments over a period of time. The annuitization phase is also called the annuity phase and the 澳洲幸运5开奖号码历史查询:payout phase.

This can be compared with the period when money is being invested or deposited into the annuity, which is called the 澳洲幸运5开奖号码历史查询:accumulation phase.

At some point, the annuitization phase begins, or the onset of payouts to the annuitant. The size of the payments and the length of time in which the payouts are made in the annuitization phase varies, depending on the type of annuity and its value.

Understanding the Annuitization Phase

After annuities move from the accumulation phase to the annuitization phase, they typically provide 澳洲幸运5开奖号码历史查询:periodic payments to the annuitant. The more money invested in the annuity, the more will be received when the annuity is paid out. The payout period is the time when the method of payment comes into play: the 澳洲幸运5开奖号码历史查询:annuitization method, the 澳洲幸运5开奖号码历史查询:systematic withdrawal schedule, or the 澳洲幸运5开奖号码历史查询:lump-sum payment. The annuitization payout method comes with the followไing options:

Life Option

The 澳洲幸运5开奖号码历史查询:life option typically provides the highest payout because the monthly payment is calculated based only on the life of the annuitant. This option provides an income stream for life, which is an effective hedge against outliving your retirement income.

The 澳洲幸运5开奖号码历史查询:joint-life payment option allows you to continue the payment to your spouse upon your death. The monthly payment is lower than that of the life option because the calculation is based on the 澳洲幸运5开奖号码历史查询:life expectancy of both spouses. The life with guaranteed term option gives you an income stream for life (like the life option), so it pays you for as lon𝐆g as you live.

Period Certain

With the 澳洲幸运5开奖号码历史查询:period certain option, the value of your annuity is paid out over a defined period of time of your choosing—such as 10, 15, or 20 years. Should you elect a 15-year period and die within the first 10 years, the contract is guaranteed to pay your 澳洲幸运5开奖号码历史查询:beneficiary for the remaining five years.

Systematic Withdrawal

The systematic withdrawal schedule is a method of 澳洲幸运5开奖号码历史查询:withdrawing funds from an annuity ac🔯count in specified amounts for a specified payment frequency. The annuitant ඣis not guaranteed lifelong payments because they're within the standard annuitization method. With the systematic withdrawal schedule, the annuitant chooses instead to withdraw funds from their account until it is emptied, bearing the risk that the funds become depleted before the annuitant dies.

Lump Sum

A lump-sum payment is a one-time payment for the value of an asset such as an annuity or another retirement vehic𒐪le. A lump-sum payment is usually taken in lieu of recurring payments distributed over a specific period. The value of a lump-sum payment is generally less than the sum of all payments that you would otherwise receive because the party paying the lump-sum payment is being asked to provide more funds upfront than it otherwise would have been required to.