I have been advising, writing and blogging clients about the dropping interest rates over the last 2 years for life annuities.
But does anyone listen? Just like government overspending and the weather, it is very hard to change per-conditioned behavior.
The latest example is a man born in 1933 who decided in February 2011 not to take a life annuity which would pay $1588 monthly for life. So he waited until now to receive $1484m, if he decides to proceed.
So what has he achieved? He has lost 6 months of payments at $1588 and permanently lost $100 a month for the future. If he doesn’t take it now he could lose considerably more. The US has shut down its interest rate window for another 2 years, so how can Canada raise rates? And even if the Bank of Canada does raise interest rates, how do you know that it will beneficially affect your annuity?
Do your planning effectively; read all you can, make a decision, then act.
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