Setting up a retirement annuity is a great way to provide some options for deferring taxes as well as ensuring that you will have a steady cash flow on a monthly basis once you end your employment. Typically all retirement annuities can be either immediate, which means they start paying within about 30 days, or they can be deferred until you reach retirement age. Either option works to help defer taxes, however early investment can lock up your money and prevent you from accessing it in times of emergency without having to pay a hefty 10% penalty on top of regular taxes. For those that wish to have a steady type of income in retirement a fixed rate annuity is the most secure option, however the rates paid on these annuities are often modest to low. Variable or market indexed annuities provide greater earning potential with regard to interest, however there is more risk. With variable rate annuities there is no guarantee on the principal investment as there is with a fixed rate annuity.