Kathy Nishnic helps clients achieve their financial goals, serving as a registered representative for Centaurus Financial, Inc., under Cola Wealth Advisors. Possessing more than two decades of experience, Kathy Nishnic has experience in everything from tax and estate planning to assisting clients with annuities.

When setting up an annuity, which is a type of insurance product, people must choose between two basic categories: immediate and deferred. Both categories include variable and fixed options, depending on how they are paid out, and both provide retirement income to owners. However, they function on different timelines.

As evidenced by the name, immediate annuities begin providing owners with payments within 12 months or sooner. In exchange for these immediate monthly payments, people provide the insurance company with a single, lump-sum payment. The amount of this lump-sum payment, along with various personal factors and the payout option, affect the amount of income annuity holders receive each month.

On the other hand, deferred annuities have an accumulation period between when distributions begin and when the annuity is set up. During this time, individuals make either a lump-sum payment or several premium payments to their annuity. There are no limits to the amount a person can contribute to a deferred annuity each year, and the money in the annuity is only taxed once it is withdrawn.