Most annuities allow you to invest a one-time lump sum, make periodic contributions, or both. Although contributions are not tax deductible, there are no income eligibility requirements or limits on the amounts that can be contributed.
If the IRA holder turns 70½ this year, he or she can defer the first distribution until April 1 of the next year. If the holder is older, he or she would normally be required to take an RMD before December 31 of this year. RMDs are considered taxable income for the year in which they are taken.
A typical retiree could potentially spend 20 or more years in retirement and require 70% to 100% of his or her final year's preretirement annual income. When estimating your accumulation needs, also keep in mind inflation, which increases living expenses and erodes earning power over time.