Accumulation Phase

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  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. Phased Retirement

    A broad range of employment arrangements that allow an employee ...
  4. Individual Retirement Account - ...

    An investing tool used by individuals to earn and earmark funds ...
  5. Annuitant

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

    The period when the annuitant starts to receive payments from ...
RELATED FAQS
  1. Where can I find a good compound interest calculator free on the Internet?

    A number of free online compound interest calculators are offered online. One of the best is available through Pine Grove ... Read Full Answer >>
  2. How often is interest compounded?

    Interest can be compounded on any given frequency schedule. Common interest compounding time frames are daily, monthly, semi-annually ... Read Full Answer >>
  3. What rate of return should I expect on my 401(k)?

    An employer-sponsored retirement plan such as a 401(k) can be a valuable tool in accumulating savings for the long-term. ... Read Full Answer >>
  4. What should you bring to a bank to open a checking account?

    Opening a checking account is a fairly simple process. You choose a bank, show up, fill out some paperwork, provide some ... Read Full Answer >>
  5. Is an annuity a perpetuity?

    An annuity can be a perpetuity, depending on how it is set up. An annuity is an investment that makes regular payments throughout ... Read Full Answer >>
  6. What does it mean when interest "accrues daily?"

    In financial terminology, "accrues" means the same thing as "accumulates." Interest is considered accrued when it is added ... Read Full Answer >>
Related Articles
  1. Retirement

    6 Late-Stage Retirement Catch-Up Tactics

    It's not too late, but if you want to retire comfortably you'll have to be aggressive.
  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

    Annuities: How To Find The Right One For You

    Fixed, variable and indexed annuities offer different features. Find out which one fits your needs.
  6. Options & Futures

    Live Longer, Retire Younger: Can You Do It?

    Use this vehicle to make sure your payout lasts as long as you do.
  7. Options & Futures

    The Stock Cycle: What Goes Up Must Come Down

    Stock prices seem random, but there are repeating cycles. Learn to take advantage.
  8. Options & Futures

    Personal Pensions: Repackaging The Annuity

    Discover an investment that can provide a stable income once you've left the work force.
  9. Entrepreneurship

    What Makes Investors Tick?

    Every style of investing is different, so where do you fit in?
  10. Savings

    How Hidden City Tickets Affect Airlines

    Hidden city tickets have been in the news these past few months because of a lawsuit launched by United (UAL) and Orbitz (OWW) against the owner of skiplagged.com – a site that automates the ...

You May Also Like

Hot Definitions
  1. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  2. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  3. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  4. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
  5. Tangible Net Worth

    A measure of the physical worth of a company, which does not include any value derived from intangible assets such as copyrights, ...
  6. Marginal Utility

    The additional satisfaction a consumer gains from consuming one more unit of a good or service. Marginal utility is an important ...
Trading Center