Keeping Annuities as Simple as Possible

There is a collection of Italian paintings from the twentieth century on show at the city art museum. Meredith is busy admiring one of the streets of Rome. Now that she has retired from her hectic job as computer systems manager, she has the time to catch up on a number of her hobbies, fine art being one of them.

Annuities Provide Less Stress

Living the kind of retirement life she wanted and not having to worry about investment decisions or income running out naturally oriented Meredith towards annuities. At work, she had also developed a heart condition that meant living a calmer, less stressful life became important, even vital. Her retirement came just in time, and so did her choice of an annuity to guarantee her fixed income every month.

A Remedy for Alphabet Soup

Meredith has a science background. However, she says ‘even I’ve always liked to know how things work, I’ve had my fill of technical terms and acronyms’: a reference to some of the jargon in the financial world. To save time and effort, and avoid ‘re-inventing the wheel’, she prefers to ask down to earth questions and get the plain truth from someone who already knows. ‘CPP, OAS, RRIF, RRSP…? What I really want to know is how I can get income to cover my needs for the rest of my life, given my situation today.’ And that is what a short discussion with Canadian annuity broker told her.

How Annuities Work

Let’s listen to how Meredith explains what is an annuity.

- An annuity is an investment in which you pay a lump sum of money (the premium) and then receive fixed income regularly afterwards.

- The amount of income you receive may depend on factors like the amount of the initial premium you pay, your age, your life expectancy, and whether or not you want your income to be index-linked (keep pace with inflation).

- If you know how much monthly income you need, then you can find out the kind of annuity you need to buy. Vice versa, for a given annuity premium, you’ll know immediately how much monthly income it will give you.

There are other factors, for example: the current interest rates when you buy your annuity; whether you are using money from another pension scheme to buy your annuity; and any other option you may choose to add to your annuity.

Making the Best Choice – For You

The basic principle of regular income from an annuity remains the same. The different options allow you to tailor that income to best suit you. For Meredith, two additional aspects made her annuity the best choice for her:

1. Her income is guaranteed for life and that guarantee is backed by Assuris.com.

2. As a single person with no dependents, she chose a ‘life-only’ annuity that in turn again increased her monthly income.

Back to the art museum. Now we’re looking at a painting of a family picnicking beside one of the Italian lakes. Meredith looks at the work of art knowingly. ‘The best choice of an annuity for them would probably be different again’, she muses, ‘and that’s thanks to the way annuities can be creative yet reliable at the same time.’

If Meredith’s situation sounds familiar and you’d like to know more about your own retirement options with an annuity, then call us today at 1.877.842.3863 for a friendly, open discussion free of charge.