Concerns we hear from seniors who see assets shrinking are very real. We frequently encounter people who have to reduce income to make sure their money lasts as long as they live.
GICs are risky. If you get 3% interest deposited each year and withdraw the minimum RRIF withdrawal which at age 71 is nearly 6% increasing annually to 20% how long will your money last? Actually the minimum income will decrease to less than half what you started with if you keep taking the allowable minimum. That,s no fun at all.
Mutual Funds and Seg. Funds offer some protection against interest rates but are very risky also. If you have a major market decline in the few years before or after you retire your regular income withdrawal can reduce the balance excessively when markets decline. Segregated funds have special advantages, like creditor protection, a death benefit and maturity guarantees. However when you draw income the guaranteed balance is reduced proportional to your withdrawal. Your money can run out quickly and that is no fun either.
There is a better solution available since October 2006 There is a special Seg. fund that not only protect your money like a traditional Seg. fund but they also guarantee an income for life that starts at 5% or your RRIF minimum which ever is higher. This applies if your money is in a RRSP/RRIF. Your income never decreases and will probably increase. Once it is increased according to the guarantee it will never decrease again.
Should you have money that is not in an RRSP or RRIF the tax treatment of these withdrawals make this special type of Seg. fund even more attractive.
Contact us for more detailed information or just click on the “Income Plus” ad at the top right of this page and listen to the videos. They call or email us to show you how simple it is to eliminate all worry about outliving your money or having to reduce your income as you get older. You chose the investment funds in this portfolio. Call for more info.
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