ATA Members

Annuities

What is more important to you when it comes time to take money out of your ATA Group RRSP? Is it flexibility, or having a steady stream of income that you know will be protected from the ups and downs of the markets? If certainty is more important to you, it may be worth taking a look at Annuities.

With Annuities, you put in a lump sum of cash all at once -- for example, as a way to convert your RRSPs at age 71 (the mandatory age from the Federal Government). The Annuity then guarantees a monthly amount to come to you.

Some cases where an Annuity might make sense:

• If a Spouse of an ATA Member has been contributing to a Defined Contribution Pension (where the pension will come as a lump sum that has to be converted)
• If you're concerned about market fluctuations and wanted a guaranteed income stream -- even if this income stream had little to no growth
• If your plan was to use the Annuity to fund regular ongoing payments (like premiums on a life insurance policy)
• If you intended the funds to go to, for example, support a family member who was incapable of making financial decisions -- it would pay them a regular stream of income rather than a lump sum that could quickly disappear
• Where it would not make sense is if you might want access to those funds at a later date. Annuities by their nature are "locked in" -- you're giving up access to that lump sum of capital in exchange for the certainty of regular payments.

Annuity options

An annuity will provide you with a series of payments for a specified number of years after retirement. Or, it will provide payments for your life, your spouse's life, or the lifetime of both you and your spouse. Different types of annuities are available, including the following:

• A life annuity, which provides income payable as long as you live, most often with a number of years of payments guaranteed to your beneficiary. The most common period selected by people is 10 years.
• A joint life annuity, which provides income payments for as long as you and your spouse live.
• A term certain annuity gives you a specified number of income payments. If you die before all the specified payments have been made, a death benefit is paid to your beneficiary. This option is particularly useful in situations where income is required for a specific length of time. For example, a five-year term may be selected to cover five years remaining on a mortgage.
• A combination of different types of annuities will provide you with income flexibility.