The retirement savings environment is seeing a decline in the number of workplace defined benefit pension plans. This means that:
- Employees are shouldering the investment risk of their retirement savings
- Their accumulated savings in retirement are being exposed to variable returns.
When you add to this the fact that many people are reluctant to part with a portion of their savings in order to purchase a life annuity - even though it may be in their best interest - then planning for retirement begins to seem challenging.
So, how can you obtain a guaranteed income for life while at the same time not having to part with your capital?
One option is Sun Life's Income Series. This is a primarily fixed-income segregated fund where you have the option to trigger a guaranteed income stream for life at any point after opening the account. The older you are when this income is triggered, the higher your guaranteed income level will be. For example, at present, if a 65-year-old woman invested $100,000, she would be guaranteed an income of $4,650 for life provided she makes no other withdrawals from her Income Series account.
When the money invested in an Income Series fund is held in a Retirement Income Fund (RIF), then the owner of the fund will receive the larger of the government mandated minimum payment or the minimum income guaranteed to them. Receiving the government mandated minimum payment will not change your guaranteed minimum income going forward.
As you near retirement, combining the Sun Life Income Series with a balanced portfolio can allow for investment growth, while at the same time guaranteeing a :floor level" of income in the future. The Income Series is not only available for RSP/RIF money - it works equally well with non-registered funds where the payment is even more tax effective. As with all segregated funds, Income Series also benefits from maturity and death benefit guarantees (adjusted for any withdrawals made).
What is your income plan? Talk to your Scrivens advisor and let us design a plan that works for you.
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