Thanks to good nutrition and advances in medicine, Canadians live longer than ever. But will our savings last as long as we do?
Today, we can expect to live 80 or 90 years, even up to 100 years.
A long life, combined with current economic uncertainty and the inflation outlook, makes the use of financial planning more important than ever. Meeting with a financial security advisor will help you assess your longevity risk and choose investments that will guarantee a regular income according to your needs. Your advisor can also recommend certain guaranteed products with features that can meet specific needs.
Here are 4 guaranteed investment products to discuss with your advisor:
- Payout Annuity
It is used to receive funds from RRSPs when you reach age 71 and need to turn your registered savings into income products before the end of the year. The payout annuity has many advantages:
recorded income that can increase each year to compensate for inflation
preferential taxation for non-registered funds
guaranteed income, ideal for covering day-to-day expenses
a choice between fixed-term income or income for life
- Insurance GIC
Also known as an “accumulation annuity” and offered only by life insurance companies. Although similar to the guaranteed investment certificate provided by banks, the insurance GIC provides different guarantees and advantages. In particular, it allows you to designate a beneficiary and offers several benefits relating to estate planning. Your investment is protected by Assuris, funded by life insurance companies. - Registered Retirement Income Fund (RRIF)
Here’s another popular product for RRSP funds when you reach age 71. The Registered Retirement Income Fund is flexible and allows you to choose the type of guaranteed investment you prefer – for example, guaranteed investment certificate (GIC), mutual funds or segregated funds. - Segregated fund contract
A segregated fund contract is similar to a mutual fund in that it pools money that many people invest in stocks, bonds or other securities to grow the pooled money. The difference is in the benefits it offers, such as a guaranteed percentage of your contributions minus a proportional reduction for withdrawals. It also allows you to choose a guaranteed income.
These guaranteed products have many facets, so talk to an advisor for more details.
4 tips to make your savings last
Determine ways to match your lifestyle to your income, such as reducing — but not eliminating — essential but non-essential expenses.
Consider selling a house that requires a lot of maintenance and buying a condo.
Work part-time or consult to earn enough income to pay your living expenses and keep your savings in investments.
Explore ways to share expenses with family members or friends.
Whether you are close to retirement or already retired, keep in mind that you have a future to plan for.
With our annuity calculator, please find out how much income you could receive from a life annuity.
