Payout Annuities
Payout Annuities
Turn your savings into steady income
Add guaranteed payments to your income strategy. Use them to cover retirement costs, fund a child’s tuition or support a spouse. Your income won’t change with the markets.
How a Payout Annuity works
Set it and forget it
Turn your savings into a steady stream of guaranteed payments. Use registered or non-registered funds to buy your annuity. Then choose monthly, quarterly or annual income. Your payment amount is set at the start based on things like your age, the type of annuity, the guaranteed payment period you select and your deposit. Once locked in, it stays the same — no matter what happens in the market.
You can choose a guarantee period
You can choose to get from five to 30 years — or even a lifetime — of guaranteed payments, depending on your plan. If you pass away before that time is up, the rest can go to your beneficiary. It’s paid to your beneficiary through ongoing payments or in a lump sum.
Increase payments over time
Help your income keep up with rising prices. Add annual indexing of 1% or 2% to your annuity. Your payments will rise each year by the amount you choose, giving you more income to keep up with any cost of living changes.
Leave a legacy, protect value
Add features to help protect your loved ones. Naming a beneficiary may help you bypass probate and keep income payments out of reach of creditors.
Payout annuity options
Life Annuity
You receive payments for the rest of your life.
Joint Life Annuity
You and your spouse continue to receive payments, even if one of you outlives the other.
Term Certain
For non-registered funds only, you get payments for a set period of time — from five to 30 years.
Term Certain to age 90
For registered funds only, you receive payments until age 90.
Buying an annuity with non-registered money
You can buy an annuity with non-registered money. It gives you guaranteed income without any market risk, and you can chose how your payments get taxed.
Level taxable income
Taxable income is split evenly between all payments. This method provides preferential tax treatment and can help reduce the amount taken back from government programs.
Decreasing taxable income
More taxable income is assigned to the early payments, and less to later ones. This reduces taxable income over the life of the annuity.
How payout annuities are different
Payout annuities vs registered retirement income funds (RRIFs) vs life income funds (LIFs).
| Payout Annuity | RRIF | LIF | |
|---|---|---|---|
| What it’s for | Turn savings (from any source) into regular income. | Turn RRSP savings into flexible income. | Turn locked-in pension savings into flexible income. |
| How savings are affected by markets | Not affected. No risk of loss. | Savings affected by market ups and downs. | Savings affected by market ups and downs. |
| How income works | You get regular payments, guaranteed. | You withdraw a minimum amount each year. | You withdraw an amount within a set minimum and maximum. |
| How long income is guaranteed | Guaranteed for a set term or a lifetime. | No guarantee. However, you can adjust your income as needs change. | No guarantee. However, you can adjust your income as needs change. |
The best advice is professional advice
Talk to an advisor about using a Payout Annuity for guaranteed income.
Source: https://www.equitable.ca/products/investments/payout-annuities
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