How to Calculate Deferred Annuity

What is Deferred Annuity?

A deferred annuity is an insurance contract where you invest money now and receive regular income payments starting at a future date (the deferral period). It combines a savings phase (accumulation) with a later income phase (annuitization), making it popular for retirement planning.

Step-by-Step Guide

1. 1Accumulation phase: money grows (tax-deferred in a traditional annuity)
2. 2Deferral period: typically 1–30 years before income begins
3. 3Annuitization: convert lump sum to regular income payments
4. 4Value at start of income = PV × (1+r)^deferral years

Worked Examples