In addition to the income options available with annuities, tax deferral of the earnings inside an annuity is a significant retirement savings benefit. The combination of tax deferral and various distribution options for taking income has made annuities an appropriate vehicle to consider for retirement savings. The earnings are tax-deferred. If you work for a small company or are self-employed, you may not have access to a qualified plan. 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.