Accumulation Period

AAA

DEFINITION of '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).

INVESTOPEDIA EXPLAINS 'Accumulation Period'

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.

RELATED TERMS
  1. Nest Egg

    A substantial sum of money that has been saved or invested for ...
  2. Pay Yourself First

    A phrase commonly used in personal finance and retirement planning ...
  3. Deferred Annuity

    A type of annuity contract that delays payments of income, installments ...
  4. Annuity Contract

    The written agreement between an insurance company and a customer ...
  5. Rule Of 72

    A rule stating that in order to find the number of years required ...
  6. Compounding

    The ability of an asset to generate earnings, which are then ...
Related Articles
  1. Bonds & Fixed Income

    Explaining Types Of Fixed Annuities

    Learn about this popular retirement tool, its pros and cons and how annuities work to create a guaranteed regular stream of retirement income.
  2. Home & Auto

    An Overview Of Annuities

    These contracts provide a guaranteed income stream. Learn how they work and their benefits.
  3. Options & Futures

    Getting the Whole Story on Variable Annuities

    Variable annuities are another way to save money tax-deferred - but don't jump in blindly!
  4. Options & Futures

    Selecting The Payout On Your Annuity

    Make sure you understand your options for withdrawing your funds from this complex instrument.
  5. Retirement

    Inflation-Protected Annuities: Part Of A Solid Financial Plan

    If you worry about inflation and longevity risks, this may be the investment for you.
  6. Retirement

    Are annuities for seniors only?

    Understand the benefits of investing in annuities at a younger age and how fixed or variable annuities might benefit the investor depending on risk tolerance.
  7. Retirement

    What is a longevity annuity?

    Understand all the characteristics of a longevity annuity contract, the purpose of a longevity annuity and what type of investor it appeals to.
  8. Trading Strategies

    What is considered a good interest rate for a certificate of deposit (CD)?

    Explore the various options available with certificates of deposit and discover how to find the most lucrative rates for CD investors.
  9. Retirement

    What are the typical durations for a certificate of deposit?

    Investing in a certificate of deposit offers individuals the ability to earn interest on idle funds with less risk than stock or bond investments.
  10. Trading Strategies

    How safe an investment is a certificate of deposit?

    Discover certificates of deposit, their basic makeup and numerous variations, and understand why they are some of the safest investments available.

You May Also Like

Hot Definitions
  1. Multiplier Effect

    The expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends ...
  2. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  3. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  4. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  5. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  6. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
Trading Center