benefits even when
rates are low
In these days of low interest rates, many
investors may assume that a Registered
Retirement Income Fund (RRIF) is a better
destination than an annuity for their Registered
Retirement Savings Plan (RRSP) assets.
Regardless of rates, however, annuities
remain a solid choice, especially for older
retirees or risk-averse investors.
Interest rates only part of the story
Annuity payments are determined by
complex calculations based on current
interest rates, how much you invest, and
your age. The older you are when you
purchase the annuity, the higher your
payments are likely to be.
Many retirees are attracted to annuities
because the income is fully guaranteed.
Whatever happens in the financial markets,
your income won't be affected. Further, you
have the choice of guaranteed payments for
a fixed number of years, for your life, or for
the lives of both you and your spouse.
The insured annuity strategy
To help you maximize income, you may want
to consider something called an "insured
annuity." With this strategy, you use a portion
of your money to purchase an annuity with
the highest possible payments (typically a
straight life annuity). The rest of the money is
used to buy life insurance. You enjoy a higher
income through retirement and the policy
ensures an income for your surviving spouse
or a legacy for your beneficiaries.
We'd be happy to explore the benefits of
an annuity-based strategy for you, either on
its own or together with a RRIF.