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 RISING WOMEN EXPERT
ADVICE...
How can I be guaranteed a secure predictable income from my
investments that will start as early as age 50 and will last me a lifetime?
With Defined Benefit pension plans being a thing of the past, many
Canadians do not have a guaranteed source of income for their retirement
years. Those who are approaching retirement are concerned with three things:
Will the money I have saved be enough to last me my lifetime, will my saving
be able to keep up with inflation and how will market returns affect my
current investments? All of these questions are very real concerns; 3 out of
4 Canadians retire before age 65 and the average Canadian is living into
their 80’s. That’s 20 to 30 years of income to save for! One must be careful
not to “put all your eggs in one basket” but there is a solution to all
three of these concerns. It’s called a Guaranteed Minimum Withdrawal Benefit
(GMWB).
Well, what the heck is that? A GMWB is a type of Segregated Fund. So, clear
as mud now, right? Let’s back up a bit first. A Segregated Fund or Seg Fund
as it is called in the industry is an investment similar to a mutual fund in
that it can produce a return but, a Seg fund is protected by insurance to
cover the risks. Which is why you will not be able to get this at your bank;
it can only be sold by an advisor who is licensed to sell life insurance. A
Seg fund has many benefits: maturity and death benefit guarantees, potential
creditor protection, estate planning options and it will bypass estate and
probate fees. So where does the GMWB fit into all of this?
There are many aspects to this product so just the highlights will be
touched on. Basically, a GMWB can guarantee your yearly or monthly income
for life, beginning as early as age 50! A minimum of $25,000 is required to
start a GMWB and you can either put non-registered money into this product
or transfer your registered money like RRSPs or Registered Retirement Income
Fund (RRIF) into it. The amount of lifetime income you can receive is based
on a notional amount called by some companies as the income withdrawal base.
The GMWB can take advantage of an “up” market through resets every 3 years
and hedges against a “down” market by offering a 5% deferral bonus which
increases the lifetime income amount. One can rest assured that with this
product your savings will be protected against you outliving your money,
inflation and market returns.
For more advice on financial planning tools, contact Teresa Perrotta,
HarbourLight Financial Solutions Ltd. at 403.516.6002 or
teresaharbourlight@gmail.com
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