Accumulation Phase


DEFINITION of 'Accumulation Phase'

1. A period of time when an annuity investor is in the early stages of building up the cash value of the annuity. This is followed by the annuitization phase where payments are paid out to the annuitant.

2. The period of time when an investor builds up the value of their investment through savings.

BREAKING DOWN 'Accumulation Phase'

1. When a person invests money in an annuity for the purpose of providing income for retirement they are at the accumulation period of the annuity's lifespan. The more invested during the accumulation phase, the more will be received during the annuitization phase.

2. Postponing consumption by saving during an accumulation period will most often increase the amount of consumption one will be able to have later. The earlier the accumulation period is in your life, the more advantages you will have, such as compounding interest and protection from business cycles.

  1. Annuity

    A financial product that pays out a fixed stream of payments ...
  2. Business Cycle

    The fluctuations in economic activity that an economy experiences ...
  3. Annuitant

    1. A person who receives the benefits of an annuity or pension. ...
  4. Annuitization Phase

    The period when the annuitant starts to receive payments from ...
  5. Individual Retirement Account - ...

    An investing tool used by individuals to earn and earmark funds ...
  6. Compounding

    The ability of an asset to generate earnings, which are then ...
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