annuitize

verb
an·​nu·​i·​tize | \ ə-ˈn(y)ü-ə-ˌtīz How to pronounce annuitize (audio) \
variants: also British annuitise
annuitized also British annuitised; annuitizing also British annuitising; annuitizes also British annuitises

Definition of annuitize

: to convert an amount of money (such as an accumulation of retirement savings) to an annuity … the standard advice is to annuitize the portion of your nest egg you'll need to cover living expenses …— Scott Woolley

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Other Words from annuitize

annuitization also British annuitisation \ ə-​ˌn(y)ü-​ə-​tə-​ˈzā-​shən How to pronounce annuitisation (audio) \ noun

Examples of annuitize in a Sentence

Recent Examples on the Web Most people don’t annuitize their retirement savings, even if reduces risk and means more income. Allison Schrager, Quartz, "It’s time to get over how much we hate annuities," 3 June 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'annuitize.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of annuitize

1786, in the meaning defined above

History and Etymology for annuitize

annuit(y) + -ize

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Statistics for annuitize

Last Updated

31 Oct 2019

Time Traveler for annuitize

The first known use of annuitize was in 1786

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More Definitions for annuitize

Financial Definition of annuitize

What It Is

To annuitize is to choose to receive a series of payments, usually from an annuity.

How It Works

An annuity is a contract whereby an investor makes a lump-sum payment to an insurance company, bank, or other financial institution that in return agrees to give the investor either a higher lump-sum payment in the future or a series of guaranteed payments. The choice to receive a series of payments is called annuitizing.

If the owner of the annuity chooses to annuitize, he or she typically begins receiving payments after the surrender period expires and the investor is at least 59 1/2 years old. The surrender period is the time (usually about seven years) during which the investor must keep all or a minimum portion of the money in the account or face surrender fees equal to a percentage (usually about 10%) of the withdrawal amount.

Annuitization is usually not required; rather, investors can simply make withdrawals when they need money.

Why It Matters

The size of the original investment, the contractual terms of the annuity, and interest rates determine how (and sometimes when) the investor annuitizes. For example, immediate annuities (also called single-premium immediate annuities or SPIAs) annuitize immediately (within one year of purchase). That is, the investor begins receiving payments as soon as he purchases the annuity and continues to receive them until he dies. The owner gives up all claims to his or her initial investment but does so knowing that he or she will have monthly cash flow for life (the rate of return on these annuities is therefore determined by how long the investor lives). Deferred annuities, on the other hand, annuitize at some future date.

Most annuity payments cease upon the death of the annuitant (this is what makes them different from regular life insurance policies, which generally make a payment to a beneficiary upon the death of the insured).

Source: Investing Answers

annuitization

noun

Financial Definition of annuitization

What It Is

Annuitization is the act of triggering a series of payments, usually from an annuity.

How It Works

An annuity is a contract whereby an investor makes a lump-sum payment to an insurance company, bank or other financial institution that in return agrees to give the investor either a higher lump-sum payment in the future or a series of guaranteed payments. The act of receiving a series of payments is called annuitization.

When annuitization occurs, the owner of the annuity typically begins receiving payments after the surrender period expires and the investor is at least 59 1/2 years old. The surrender period is the time (usually about seven to 10 years) during which the investor must keep all or a minimum portion of the money in the account or face surrender fees equal to a percentage (usually about 10%) of the withdrawal amount.

Annuitization is usually not required; rather, investors can simply make withdrawals when they need money.

Why It Matters

The size of the original investment, the contractual terms of the annuity and interest rates determine how (and sometimes when) annuitization occurs. For example, immediate annuities (also called single-premium immediate annuities or SPIAs) annuitize immediately (within one year of purchase). That is, the investor begins receiving payments as soon as he purchases the annuity and continues to receive them until he dies. The owner gives up all claims to his or her initial investment but does so knowing that he or she will have monthly cash flow for life (the rate of return on these annuities is therefore determined by how long the investor lives). On the other hand, annuitization for deferred annuities may occur at some future date. Most annuity payments cease upon the death of the annuitant (this is what makes them different from regular life insurance policies, which generally make a payment to a beneficiary upon the death of the insured).

Source: Investing Answers

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