At the stage of accumulation, a person finances the annuity with the help of multiple investments or a single premium. The insurers invest money and provide lifelong benefits to people.
There are several different types of annuities. The most common is a deferred annuity. Deferred annuity allows accumulate income for a certain period of time, and then, when the person decides to go on a well-deserved rest, the insurer's payments begin.
Variable annuity is the riskiest type of annuity. The profits and losses depend on the market and are correlated in proportion to it.
Fixed indexed annuity allows prospective retirees to participate in market's profits without worrying about losses. Although, by choosing such an annuity, a LIC client can earn 0% in certain years.
The simplest type of annuity is a fixed annuity. This annuity has all advantages of the other two types (tax deferral and guaranteed income for life), the interest rate is fixed, so the person does not risk losing money, but also does not earn much.
Americans buy annuities most often at the age of 40-70, but even a 20-year-old can start saving for future retirement. The longer you are saving, the bigger your pension will be.
Source: https://ktar.com/story/4788620/annuity-basics-how-to-retire-with-a-guaranteed-paycheck-for-life/
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