How Do Annuities Work?
In this video, Juliette Fairley explains that annuities work by investing a lump sum or series of payments, which grow tax-deferred and later provide a cash flow in retirement, with taxes paid only upon distribution.
Video Transcript
The way that annuities work is that you invest a lump sum or a series of payments which then creates a cash flow for you later in life in retirement. And the money that you invest, either the lump sum or the payments, grow tax deferred, which means that you're not taxed during the time that it's accumulating in the annuity, but rather you're taxed at the end when it's dispersed in your retirement years.
