how the accumulation phase works
the accumulation phase is also a specific period when an annuity investor is in the early stages of building up the cash value of the annuity this building phase is followed by the annuitization phase where payments are paid out to the annuitant the accumulation phase essentially begins when a person starts saving money for retirement and ends when they begin taking distributions for many people this starts when they begin their working life and ends when they retire from the work world it is possible to start saving for retirement even before beginning the work phase of one s life such as when someone is a student but it is not common typically joining the workforce coincides with the start of the accumulation phase importance of the accumulation phasethe sooner an individual begins the accumulation phase the better because the long term financial difference between beginning to save in one s 20s vs in their 30s is substantial 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 in terms of annuities when a person invests money in an annuity to provide income for retirement they are at the accumulation period of the annuity s life span the more invested during the accumulation phase the more will be received during the annuitization phase real world examplesthere are many income streams that an individual can build up during the accumulation phase starting from when they first enter the workforce or in some cases sooner here are a few of the more popular options 