Annuities turn your savings into a reliable income for retirement, so you don’t have to worry about outliving your money. You pay a lump sum to an insurance company. In return, it pays you a regular income for life or for a set number of years. Our advisors in Ontario, Quebec, Nova Scotia, New Brunswick, and Alberta can help you choose the plan that fits your retirement goals. For an independent overview, see the Financial Consumer Agency of Canada’s guide to annuities.
Annuities can add stability to your retirement income in several ways:
You can buy an annuity with money from an RRSP, RRIF, or pension plan. In that case, the payments count as taxable income when you receive them. Many retirees use a registered annuity to turn part of their savings into guaranteed income.
You can also buy an annuity with savings outside registered plans. In this case, only the interest part of each payment is taxable. Some non-registered annuities qualify as prescribed annuities, which spread the tax evenly over time. As a result, they can be tax-efficient for retirees.
A life annuity pays you for as long as you live. It usually pays the highest income. However, payments stop at death unless you add a guarantee period.
This option pays income for as long as either you or your spouse lives. So, your partner keeps receiving income after you pass away.
This pays for a fixed number of years that you choose. If you pass away before the term ends, your beneficiary receives the remaining payments.
Your payments depend on factors such as your age, interest rates at the time you buy, and the options you choose. For this reason, it’s worth comparing quotes from several insurers.
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