Aviso Insurance Inc.

Choosing the best income option for your RRSP is a key decision as you approach retirement.  Transferring those savings to a RRIF will likely first come to mind.  But there’s another choice that’s often overlooked.  If you want secure, predictable income, no matter what interest rates or stock markets do, annuities can be the answer.

How an annuity works

When you purchase an annuity you hand over a lump sum to an insurance company in exchange for regular guaranteed income payments.  The cost of an annuity depends in part on how much income you need, and how long you need it.

Annuities come in various shapes and sizes.  For long-term security you can buy a life annuity and receive payments for the rest of your life.  If you want to top-up your income for a set period, a term certain annuity can help.  You can work specific options into the mix like inflation protection, or go with a joint annuity that will continue to provide payments to your spouse after your death. 

The beauty of an annuity is once you buy it your future income is protected.  You’ll continue to receive the income you are entitled to, even if interest rates fall or the stock market has ups and downs.

Are annuities right for you?

Annuities are a safeguard against outliving your money.  If there’s little chance of that happening – perhaps you have a generous pension or significant savings – an annuity may not add much value.  Also, think twice if you’re in poor health; annuities are more cost effective when you’re able to collect payments over many years. 

When can annuities help most?  If you either don’t have a pension, or your pension income and the cash flow generated by your investments falls short of meeting your expenses. 

Get the best of both worlds

Choosing a RRIF or annuity doesn’t have to be an either-or decision.  These options often work best when they work together.  For example, you could start with an annuity to cover your living expenses and commit the rest of your retirement savings to a RRIF where you can invest to keep your capital growing or withdraw as you wish.  

Will annuities be part of your retirement plan?  Speak with a financial advisor and create an income solution for the lifestyle you want, now, and for tomorrow.

Aviso Insurance Inc. offers financial planning, life insurance and investments to members of credit unions and their communities. Your insurance contract will provide details of the coverage available under the plan you choose. Restrictions may apply.