Annuity deferral period is the length of time during which an annuityTMs value grows on a tax-deferred basis before systematic distributions or annuitization begin. In deferred annuities, the deferral period can range from a few years to several decades, allowing earnings to compound without current income taxation. The deferral period ends when the owner begins taking income or when required minimum distributions force withdrawals from qualified contracts. The chosen deferral period affects product selection, surrender schedules, and how annuity income integrates with Social Security, pensions, and portfolio withdrawals in retirement.

Advisors design annuity deferral periods by aligning contract timelines with clientsTM planned retirement dates and other income sources. For example, a client retiring at 65 might fund a deferred income annuity at 60 and defer income for five years. Advisors highlight the advantages of tax-deferred accumulation during the deferral period, but also warn about liquidity constraints and surrender charges if plans change. They may use multiple contracts or laddered deferral periods to create flexible income start dates. Understanding annuity deferral periods helps advisors coordinate annuities with broader retirement income strategies, smoothing cash flow and managing tax exposure over time.