Interest rates on GICs and corporate bonds, which are used to calculate annuities, have tumbled to their lowest in a long time resulting in less income for life annuitants.
An annuity changes capital in an RRSP or tax paid capital, into a guaranteed life income for the annuitant or annuitants with or without a guaranteed period.
Investors are concerned about these debt problems in Europe, UK and the US and are returning to guaranteed products like GIC’s, Treasury Bonds and annuities.
Will annuity rates continue to fall?
It is hard to calculate what will happen to annuity rates but with US rates at zero, it is hard for Canada to raise interest rates and therefore annuity rates.
Retirement without an annuity
It is not the time to hold-off buying an annuity.
3 Reasons To get Your Annuity Now
1. Annuity rates could go lower
2. Every month an annuity is deferred is a month without income
3. Lost income from waiting is not guaranteed to be made up in the future.
You need to spend time to decide what type of annuity is the best for you and for your spouse but then you need to do it.
You cannot know what will happen in the financial markets or what annuity rates may be in the future.
Take These 3 Annuity Steps
1. Get the best possible annuity broker to shop the market for the best income.
2. Make sure you are invested safely.
3. Avoid any type of annuity linked to the stock market if you want your income to be guaranteed.
Annuity – Home Page
Annuity – Quotation