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 invest in the annuity. IRAs require the holder to begin receiving minimum distributions at age 70 . Annuities do not have minimum distribution requirements.
Annuities have certain disadvantages, as well.
It is important to note that payments into an annuity aren't tax deductible. For this reason, most experts recommend maxing out your contributions to other available retirement plans before you think about an annuity. Business planning If you are self-employed or own your own business, you may want to consider an annuity to supplement your own retirement. As you probably won't be able to take advantage of a generous pension plan, an annuity can be used to fill in the gaps after you have made the maximum allowable contributions to other available retirement plans. Again, if you plan to retire early you'll have to watch out for the 10 percent early withdrawal penalty.