Fixed Income Management and Retirement - Fixed Income Management and Retirement

Annuities Also in this section: Retirement Income Funds

Annuitant: An individual who purchases an annuity and will receive payments from that annuity.

Annuity: A series of regular periodic payments comprising principal and interest. An annuity is a contract providing for a series of payments. In the case of retirement, an annuity is usually purchased from an insurance company who then pays the purchaser a monthly amount while still alive. Annuities may have more complicated features such as indexing, guarantee periods and benefits payable to a spouse or other beneficiary after death.

- Taken from the Fiscal Agents Financial Glossary

When an individual purchases an annuity, they usually pay a lump sum from their RRSP, or other source of funds, to an insurer. The insurer then takes this (premium) and divides by an annuity factor based on mortality, current interest rates and payment features.

The main reasons behind the purchase of an annuity are:

Requiring a simple and secure source of income,
reducing the ongoing investment decisions
Annuities come with different options and types of registration. A "single life" annuity provides determined income for the individual, whereas "joint and last survivor" is designed to cover two individual lives. Depending on who is the primary annuitant, payments continue to the secondary annuitant. See our article Annuity options explained.

When it comes to converting your RRSP monies into income producing investments and planning for the future, the sheer number of options between buying an annuity and other type on income producing investment vehicles and opportunities can become overwhelming. Their are Life annuities issued only by Life insurance companies and as the name suggests, income will continued for a life time. Long Term annuities as with life annuities are a stable offing from the life insurance sector. Shorter term certain annuities are also offend by banks and trust companies.

Throughout our retirement income sections, you'll find discussion on Annuities, Income funds, and pensions. It's important to recognize not one solution fits all. In fact, combining deferment products to suit particular needs is sometimes the best option. As a First Step to smarter choices, understand where the money is coming from. Utilizing the planners and workbooks from our site's Financial Tools you can quickly get your plan together. Start with the Cornerstone Directory, then use the calculators to bring together a summary overview of your finances. Your investment advisor has 25 reasons to assist you in pulling this together!

For those who like to leave nothing to chance, the information on Incapacity: Planning ahead helps and Structuring an effective Will is ideal. Also, take a peek at the information provided on Being an executor. Finally, the Estate Planning section can help you to determine and ensure that you have not missed anything while bringing your affairs to order.

To obtain a clearer understanding about the particular terms involved in Retirement Income planning, take a look at Fiscal Agents' Glossary of Retirement Terms.

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