Friday, May 27, 2016

To buy annuity or not to buy annuity, that is the question

In the next two years I have to convert my Registered Retirement Savings Plan (RRSP) into what is called a Registered Retirement Income Fund(RRIF). This is where the government of Canada gets back the taxes that were deferred when the money was put into the RRSP. 

I have to make some decisions about where I should put our money, should I put it into investments within the RRIF or should I put it into an Annuity within the RRIF. So I have been investigating and I recently discovered information about annuities, which you may find interesting. When making investment decisions always consult your Financial Planner to see if you are making a choice that will work for you.

What is an annuity? An annuity is an obligation of an insurance company. If an annuity makes a guarantee it is always based solely on the ability of that insurance company to pay its claims. An annuity is not a bank obligation and is not insured by FDIC or any other federal agency.

There are many types of annuities and they can accomplish different goals. An annuity, for example, may provide tax-deferred growth, immediate income, or income at a future date. An annuity may guarantee a steady income for life or the income can be limited to a specified period of time. Some annuities even combine growth and income features. 
Chances are good that you have a very simple goal in mind when shopping for your annuity: to make the right choice at the right price and rest assured you’ve done the right thing. Sounds easy enough, but for many consumers the annuity shopping process can feel quite overwhelming.

To help you get organized here is a link to a site that gives you 17 key
tips. By tending to each of these, you will be well on your way to making an informed and successful annuity decision. Here are the first two tips that show this site is interested in giving good information not selling annuities (which they do as well).

Tip #1 
Take your time. An annuity purchase is a big decision. Be sure you have a good reason to buy, and then avoid anything that feels like pressure to rush. Planning for your retirement takes patience and a carefully executed strategy. We understand that it may take months or years to move from your first contact to being ready to sign an application. 
Tip #2 
Shop around. The first annuity you see may not be the annuity you buy. We'll explain to you how to compare the various types of annuities and their options (and be sure that you're comparing “apples to apples”). We can also point you in the direction of the “top contenders” and break down the differences to help you hone in your buying decision. Then take your time to investigate the marketplace.

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