Don’t forget annuities!
When asked why they haven’t considered annuities for retirement income, new clients often respond, “with interest rates so low, I thought an RRIF would create more income.” Remember: financial institutions will likely design retirement income plans based solely on their products, and many are not even licensed to sell annuities.
The wide variety of annuities makes it easy to customize a plan to meet your individual needs. The proper annuity can eliminate the income stream worries and reinvestment decisions associated with RRIF-only plans. Whether you require a Joint Life Annuity to provide continued security for your spouse or an Insured Annuity to maximize a lifetime income for both of you and your beneficiaries, sound independent advice is recommended. Don’t let a financial institution’s lack of products adversely affect your retirement security and peace of mind. You have the option to switch all or a portion of your RRIF to an annuity at any time. If you’ve already placed all your eggs into one RRIF basket, don’t forget annuities as an option.
A recent example is a 78-year-old client that had $30,000 to invest for monthly income. At current monthly pay GIC rates, 3.5% paid him about $88 per month. Then we looked at a life annuity. The payout of $222 per month not only more than doubled his income, but it was also guaranteed for life for him. His estate was guaranteed 15 years of payments upon his death. That is equivalent to an 8.8% payout. Because of his age ( the older you are the more you receive) he now has a higher income and no longer the worry of reinvestment. Interest rates would have to double to reach an equal amount of income. Now he has peace of mind and security for his retirement income. Check out annuities as an option.