After decades of working, you want to retire gracefully. After life’s all hustle bustle to earn money, your retirement years is the time to relax and make the most out of it.
You are sitting in the relaxing chair, watching TV, having a cup of coffee with no worries about office meetings, deadlines, commute. Retirement is all about spending quality time with your beloved. It is the time to reconnect with your greatest leisure pursuits and relevant goals.
But there are certain things that you need to look after starting from now so that you can live your retirement days delightfully. An annuity is one such financial aspect you need to look into now.
What is an annuity?
An annuity is a financial instrument that provides you with a guaranteed income after retirement. The insurance companies give these annuities. And to pay your invested funds in a fixed income stream in the future. As an investor, you need to fund the product by paying a lump sum or a recurring payment.
The money you receive from the annuity is of the combination of the below-mentioned factors:
- The interest
- Return to your capital
- Transfer of capital from annuity holders who die earlier than statistically expected of those who might live longer
You can choose when you want the payments to start.
What are the Annuities in Canada?
1. Life annuity
This annuity offers you guaranteed lifetime income. There is no risk of outliving your income, and there are additional options to provide the money to your beneficiary after you have passed.
2. Term-certain annuity
This annuity offers you the payment for a set period. Your beneficiary receives the remaining amount in regular payments after your death.
3. Variable annuity:
In this type of annuity, the provider invests your money in products that provide valuable returns. Compared to the life and term-certain annuity, this annuity will provide you with a lowered fixed income.
Ways annuity can help you in retirement.
1. Save money to retire
An annuity is a great way to save money for your retirement. You can invest money in an annuity and use the money as an additional income option.
2. Can be obtained as per your choice
You can decide how you want to receive the annuity. You can decide if you wish to pay a fixed amount or variable.