These Tax deferred investments are a means of securring a steady cash flow.
They are a basket of Mutual Funds wrapped inside an insurance contract. These investments come out with new guarantees, (living and income) from time to time. It then pays you a level of income in retirement that is determined by the performance of the investments chosen. Variable annuities are designed to grow your savings by giving you a chance for long-term capital growth. They do this by allowing you to invest in anything from half a dozen to 15 or so subaccounts which are stock or bond, mutual-fund-like portfolios.
These type of Annuities are an insured investment. They pay guaranteed rates of interest, in many cases higher than a bank’s CDs. They can either be deferred or immediate. The deferred annuities accumulate regular rates of interest while the immediate annuities make fixed payments which are determined by your age and size of your annuity.The convenience and predictability of a set payout makes Fixed Annuities a very popular option for individuals who want a known income stream to supplement their other retirement income.