Annuity Types in A Retirement Income Plan
June 24, 2020 by Wade Pfau
It is worth mentioning a few other annuities that could play a role in a retirement income plan, before digging into the discussion of deferred variable and fixed index annuities.
Deferred Fixed Annuities
Deferred fixed annuities (DFAs), or multiyear guaranteed annuities (MYGAs) may be used as an accumulation tool in the years leading up to retirement. They are the annuity equivalent of holding CDs or other shorter-term fixed-income investments to a targeted maturity date. These annuities are deferred because they do not require immediate annuitization. Though all annuities offer an ability to annuitize the assets into a stream of payments, this may not be the priority for most DFA purchases. Rather, the objective is to seek competitive after-tax fixed-income returns for assets.