A key part of your retirement planning is having a strong income strategy that makes you feel secure. One major consideration is ensuring that you have enough money to last as long as you live.
In recent years, a new type of annuity was introduced that may fit into your long-term retirement income planning strategy: The “deferred annuity”—sometimes called a “longevity annuity.” This type of annuity also borrows a key feature found in an immediate annuity.
A deferred annuity is one that delays payments until the owner chooses to receive them, while providing an opportunity for growth of income during the deferral period. An immediate annuity usually begins paying out protected income within one year after the date of purchase, either for life or for a selected time period.
With a deferred annuity, you purchase the annuity well in advance of the annuity starting date. This is the date on which you receive the first payment from the annuity. Often, the purchase is many years in the future, so your payments won’t begin for quite a while. Like an immediate annuity, you will know the amount of the income benefit at the time of your purchase.