How do you receive income from an annuity?

Annuities Information

Financial Terms

How Do You Receive Income from an Annuity?

Generally, annuities can provide immediate or deferred income during retirement. You can choose the one you need based on your financial situation, retirement time horizon and other factors that address your retirement needs

If you will be making a lump-sum contribution into your annuity of choice, then you should consider an immediate annuity —you will begin receiving income instantly or shortly after your initial contribution.

However, if you need to make contributions over a period of time and interested in receiving income in the future, a deferred annuity is your solution. There are two phases to a deferred annuity: accumulation and annuitization.

The accumulation phase is the period of time when you make payments into your annuity, either in a lump-sum or in ongoing payments. During this phase, your annuity grows on a tax-deferred basis. This means that you do not have to paying taxes so that your money remains in the account to grow. You have more money available because of the compounding effect on your earnings—your earnings are re-invested continually for future growth.

On the other hand, the payout or annuitization phase begins as soon as you receive your first annuity payment. During this phase, the insurer will make either a lump-sum payment or a series of payments to you, as specified in your annuity contract.

Go Back to Annuities

What is an annuity?

Why is an annuity a good investment option for retirement?

What are the features and benefits of an annuity?

How do you receive income from an annuity?

What types of Annuities are available?

Why is a fixed annuity a good choice for low-risk investors?

Why is a variable annuity a better choice for investors concerned with inflation?

Why is a combination annuity a good choice for investors concerned with security and inflation?

Are there any Federal restrictions?

What are the key financial terms you should know?

Important Notice about Purchasing a VALIC Annuity From Us

To help the government fight the funding of terrorism and money-laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who purchases certain annuity products. What this means for you: When you purchase certain annuity products from us, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may ask to see your driver's license or other identifying documents.

Annuities and insurance products are offered by The Variable Annuity Life Insurance Company (VALIC), AIG Annuity Insurance Company, AIG-affiliated insurance companies or other approved companies. Each underwriting company is financially responsible for its own insurance products.

Securities and investment advisory services are offered by AIG Retirement Advisors, Inc., member FINRA, SIPC and an SEC-registered investment advisor.

AIG Retirement is the marketing name for the group of companies comprising AIG Retirement Advisors, Inc.; AIG Retirement Services Company; and The Variable Annuity Life Insurance Company (VALIC); each of which is a subsidiary of American International Group, Inc.

This information is general in nature and may be subject to change. Neither VALIC nor its financial advisors or other representatives give legal or tax advice. Applicable laws and regulations are complex and subject to change. For legal or tax advice concerning your situation, consult your attorney or professional tax advisor.