Accumulation Period

Accumulation Period

1. The phase in an investor's life when he/she builds up his/her savings and the value of his/her investment portfolio with the intention of having a nest egg for retirement.

2. In the context of a deferred annuity, the period of time when the annuitant is making contributions to the annuity and building up the value of his/her annuity account. This is usually followed by the annuitization phase, when guaranteed payments are paid out to the annuitant for a specified period of time (usually the rest of his/her life).

Notes:

1. By choosing to defer spending until later in life, individuals create savings that can be invested in the marketplace and therefore grow over time. If they periodically invest money over the duration of their working lives, individuals can create a very lengthy accumulation period during which their savings can grow to substantial proportions.

2. In a deferred annuity, the greater your contributions are during the accumulation period (and the longer the accumulation period is), the greater your income stream will be once you begin the annuitization phase.

See also: Annuitant, Annuitization Period, Annuitization Phase, Annuity, Annuity Contract, Business Cycle, Compounding, Deferred Annuity, Individual Retirement Account - IRA, Nest Egg, Rule of 72, Savings