What is it? Essentially it is income for life. Guaranteed income on retirement is a regular income payout you start to receive after you retire. This allows you to meet your financial needs after retirement, without worrying about where your monthly income will be coming from.
How can you get it? An annuity is often the most efficient option when looking at setting yourself up with a guaranteed income on requirement. An annuity gives you a guaranteed income for a pre-set period of time or for life. In exchange for a single lump sum investment, you make regular income payments that contain both interest and a return of principal.
There are several different types of annuities to choose from in order to set yourself up for guaranteed income on retirement. Term annuities can provide you with guaranteed, regular income for a pre-set period of time. Once the time period is over, the payments stop.
Prescribed annuities are another option for guaranteed income on retirement. These offer privileged tax treatment if you are investing using non-registered funds. Each payment you make includes the same amount of interest and capital, thus evening out the amount that is subject to tax, and providing you with some tax deferral.
A third option for guaranteed income on retirement is a life annuity. A life annuity pays a regular, guaranteed amount of money of a monthly basis, for the rest of your life. They can be purchased as a single life, based on a single person, or as a joint and survivor.
A life annuity is often the best option for guaranteed income on retirement, or income for life. This is because it deals with 2 major retirement risks: the chance that the stock market may crash before you are set to retire, and that your savings will run out. Statistics Canada has reported that the average man who has reached age 65 could expect to live an additional 18.1 years and a 65-year-old woman could expect to live an additional 21.3 years. These are significant periods of time, but because your income is set, you can always count on the monthly income that comes for the rest of your life.
Guaranteed income on retirement gives you the peace of mind to enjoy retirement without the financial stress that can accompany it. As with any retirement planning, it is better to start early. Instead of waiting until you are getting ready to retire, take the time now to look into your options, specifically those that will provide you with an income for life.
To discuss your options and find out what best meets your needs for retirement and how to ensure that you have income for life, please contact Gary Mandel at Independent Financial Concepts Group by calling 416-849-1653 or visit www.wecoveryou.ca