Canadians in retirement want to know that they’ll be okay, in a financial sense, throughout this stage of life. It’s a time that involves making a series of important decisions about one’s finances. And while retirees come from all walks of life, many share the same goal: creating and maintaining a reliable stream of income in retirement.
A financial security advisor and investment representative with Moe Mailloux Financial Services can help you select the retirement products and services that are right for you.
A Registered Retirement Income Fund (RRIF) is an account registered with the federal government that gives you a steady income in retirement. Before, you were putting money into your RRSP to accumulate savings for retirement. Now, you withdraw that money from your RRIF as retirement income.
A life income fund (LIF) or locked-in retirement income fund (LRIF, RLIF, PRIF) is like a RRIF, but is for money that originally came from a pension plan. The funds are held in either a locked-in retirement account (LIRA) or a locked-in RRSP and then converted to a LIF.
While different provinces have different rules, both LIFs and LRIFs have both minimum and maximum annual withdrawal amounts.
Annuities are contracts issued and distributed (or sold) by financial institutions where the funds are invested with the goal of paying out a fixed income stream later on. They are mainly used for retirement purposes and help individuals address the risk of outliving their savings. Upon annuitization, the holding institution will issue a stream of payments at a later point in time.
KEY TAKEAWAYS
Annuities are financial products that offer a guaranteed income stream, used primarily by retirees.
Annuities exist first in an accumulation phase, whereby investors fund the product with either a lump-sum or periodic payments.
Once the annuitization phase has been reached, the product begins paying out to the annuitant for either a fixed period or for the annuitant's remaining lifetime.
Annuities can be structured into different kinds of instruments—fixed, variable, immediate, and deferred income—which gives investors flexibility.
