Annuities may be a way for you to supplement your Social Security income during retirement. IRAs place a limit on contribution amounts. Annuities do not have a limit on the amount of funds that you can allocate to the annuity. IRAs require the holder to begin receiving minimum distributions at age 70 . Annuities generally do not have minimum distribution requirements until a later age, increasing the value of tax deferral.
Annuities have certain disadvantages, as well.
For this reason, most experts recommend making the maximum allowable contributions to other available retirement plans before you think about an annuity. If you do decide to purchase an annuity, keep in mind that costs and returns can vary greatly from one annuity to another. So it pays to do some comparison shopping before you buy. Keep in mind, too, that annuities are not utilized exclusively for retirement purposes. Many people use annuities to help achieve other important financial goals such as starting a business.