|
Invest for income to last a lifetime |
|
Maymar Naman, The Banner
During retirement you need to think about your financial issues differently. Most importantly you will no longer be receiving a pay cheque and you will need other sources of income.
This means you will need to budget your spending more carefully while investing your money in lower risk, higher income but tax efficient investments. This should be your priority in budgeting your finances to allow your nest egg to outlast you. But when you look at the current low GIC rates and consider the after tax net income, you are barely left with anything. This will lead to forced withdrawals from your savings.
The good news is that there are solutions available. Investing for dividends payments and capital gains are the most tax efficient way of investing. But you are exposed to market volatility and there are no guarantees in investing in such instruments. However, there are many specialized products designed to address this dilemma. One popular option is a guaranteed income investment. These products give you peace of mind of guaranteed income for life. The guarantee is currently higher than GIC rates and is payable every year for life regardless of the performance of your investment. There is also a death benefit guarantee that is transferred to your beneficiary tax free which will allow you to preserve your estate value to your loved ones. Using this solution will allow you to more effectively manage your budget since you are more certain of your income every year no matter what happens and at the same time be able to participate in portfolio growth and to be able to transfer your estate.
You should consult your Wealth Advisor and see if any of these options work for you.
Maymar Naman is a Life Underwriter with ScotiaMcLoed Financial Services Inc. This article is for information purposes only. Certain conditions apply. Exceeding the withdrawal thresholds may have a negative impact on future payments. The Lifetime Withdrawal Amount becomes available January 1st of the year the annuitant turns age 65. Other conditions may apply. Returns will differ depending on age, sex, tax bracket, health, smoking status, and prevailing interest rates. |
