Planning to retire soon?

Annuities Will Provide You a Monthly Income for Life

By Ivon T Hughes
planning to retire soon?
Figure 1. Planning To Retire Soon?

Where would you like to put your retirement savings?

With retirement in the horizon, it becomes crucial that you start planning your finances. Like most Canadians, you might go over the usual investment options, such as certificates and bonds, or venture into the stock market. Yet, these options carry an inherent risk of volatility and rely completely on the state of the global economy. At this point, it is next to impossible to infer the state of the economy five years from now, which itself presents a dilemma for most would-be retirees today. Many then are faced by the question: would you like to put your money in an asset that does not guarantee consistent returns?

Annuities as the proferred option for most retirees

If you are relying on the money you have saved to get you through the post-retirement years, it is imperative that you look for an investment option that continues paying out for as long as you live. Here, there is only one option that comes to mind: annuities. Annuities are a financial product offered by insurance companies to people who want to invest their money and then receive a monthly return on it. Though annuities are open to everyone, they hold particular value for people looking to retire in the near future.

The monthly income you receive from the insurance company depends on a number of factors, most significantly the amount of money you have paid to them and your age. You can use the money you have saved up to purchase a life annuity and continue to receive the payments that will be made monthly into your bank account. Since the annuity is for life, the payments will only cease upon your death. Then too, you have an option to keep the payments going on beyond your death if you buy a non-registered annuity.

The major incentives of a life annuity

One of the major incentives for selecting a life annuity is that the other investment classes aren’t offering the rates of return they did once. You cannot expect to make a decent income investing in a GIC or in bonds. More people are in fact exploring the possibilities offered by life annuities now that the demand for GIC’s and bonds has decreased considerably. A minimum payout rate is guaranteed by the insurance company for life and any guaranteed period.

With a life annuity, you get two things: a monthly income and a guarantee that you will receive your monthly income for life!

The returns that you might enjoy on your investment in the financial markets do not provide the peace of mind which a monthly income for life provides. Also, you don’t have to fiddle with your investment. Once you have paid the company the lump sum for your policy, you can sit back and relax. They will continue paying you for as long as you live.

Any concerns you have regarding your savings not being enough to carry you through to the end of your life are alleviated once you opt for a life annuity and the monthly income it provides. In short, it is a great option for retirees.

Ivon T Hughes
Phil Barker

About the Author

Phil Barker

Phil Barker is a leading expert on life annuities in Canada. has different financial products and has been a recognized authority since 1972.

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