The more money you earn, the more taxes you will pay. Investors are constantly looking for ways to protect their interest earnings and decrease their annual taxes.
You can decrease your annual tax bill through accounts or financial products that allow your money to grow “tax deferred”. This means that the tax due on any gains is deferred until a later date, usually when you take some or all of your money.
In tax deferred accounts, you are earning compounded interest and thus deferring the taxes. This results in faster overall growth of your money. You earn interest on all or a portion of your principal and you earn interest on your interest during the deferral period.
Annuities provide the benefits of tax deferral and competitive interest earnings. There are many types of annuities available. There are many options available within annuity products, as well. Most annuities provide you with annual surrender charge-free access to a portion of your funds; and all can be converted to a guaranteed income stream for the rest of your life or a specific period of time – you choose.
Annuities are safe retirement vehicles, allowing your money to grow tax deferred until such time as you need it.
In summary: Tax deferred accounts grow larger in value than taxable accounts (all other factors remaining the same) giving you more money to pay tax with.