What is the annuitization period?

The annuitization period refers specifically to the phase when the accumulated value of the annuity is converted into a stream of income payments to the annuitant. This is a critical stage in the lifecycle of an annuity as it marks the transition from growth or accumulation, where the investments might have appreciated in value, to distribution, where those funds are distributed as periodic payments over a specified time.

During this period, the annuitant receives regular payments, which may be structured in various ways, such as for a fixed period, until death, or in some other format outlined in the annuity contract. This phase is essential for individuals who depend on their annuity for retirement income, as it provides financial stability through consistent cash flow.

Understanding the annuitization period is crucial for both clients and advisors in effectively planning for income during retirement.