What is an annuity and do I need one?
Вставка
- Опубліковано 5 жов 2024
- What is an annuity? Today I'll be sharing what they are, the pros and cons of them, and 5 things to consider before investing in one.
If you have any questions, feel free to drop them in the comments.
_______________________________________________________________
Do you have more questions that have been unanswered? Would you like to understand your finances better?
k4financial.ca
or email info@k4financial.ca
K4 is the home of the $500 plan- a new, better option for the average Canadian.
Tiktok: / k4financial
Facebook: / k4financial
Instagram: / k4financial
Don't forget to SUBSCRIBE to stay up-to-date with our latest videos!
_________________________________________________________________
DISCLAIMER: All content being published on this platform are for informational and entertainment purposes only, and do not constitute formal financial, accounting, nor legal advice. Kent Tilley does not hold formal education nor registry to be held accountable for any professional recommendations - those in need of formal financial advice/ planning must seek help from licensed professionals. Kent takes pride in the sense of freedom, satisfaction, fulfillment, and empowerment that financial competence that he has built through conscious management of his family’s money. With this, there is no guarantee that the overall content found here are appropriate or applicable for every individual. By proceeding, you agree to hold Kent harmless from any ramifications, financial or otherwise, that may occur to you by acting upon the information found on this platform.
Great video! Simplistic and informative. To build on top of this, have a transitional video of RRSP to RRIF - what to buy (fixed, gic, equities, etc), ideal ways to invest RRIF money so it lasts, Annuity vs RRIF, RRIF rules, etc. Thanks!
Like your videos. concise and easy to understand. Thanks.
Thanks
I feel that Peace of Mind is quite often left out of the equation when we're talking about retirement goals. I happen to think that in order for me to enjoy my retirement that I absolutely need to have my house paid off. It might not make the best sense given how low interest rates are and I might make more by investing the extra cash but at the end of the day my house will be mine and that's worth it IMO. Peace of Mind is a big deal.
I believe almost everyone should be mortgage free by the time they retire, otherwise it makes it very difficult to make it work
right, Mr Frank..... and to the point. PEACE OF MIND, in this mad mad generation, is of UTMOST IMPORTANCE. we see random acts of madness, all t h e t i m e ......retirement, by definition, includes peace of mind,...that's what it is all about.....security from disasters. like having a backup generator on your property, house, mobile home, acreage, etc.
Forgot to mention I have about 500,000 in DC plan
Great video! Annuities seem to be largely ignored these days. My old employer wanted to wind down two pension funds in different divisions, so they just bought annuities that pay out on the same terms as my pensions (I am in 3 DB plans). I wondered what the effective interest rate is on annuities so I figured that with, say, a 5.5% payout on a 65 year old, the actuarial median payout period would be about 20 years (middle of the bell curve living to 85), so the middle of the bell curve is basically equivalent to a 20 year loan and retiring a hundred thousand dollar loan in 20 years paying out $5500 in principal and interest to the annuitant works out to roughly 2.8% interest rate that the insurance company is paying out to the annuitant pool. For a guaranteed product that's actually not a bad deal.
That is a decent deal. I’d be happy if I were you because now the risk is on the insurance company rather than the shoulders of a company in an uncertain and constantly changing economy.
Not sure how they could possibly afford the purchase, but that’s interesting to hear. Thanks for sharing.
Annuities have definitely fallen off the map since interest rates have dropped so low. I’m not sure who really offers them anymore other than Sun Life. My main carrier that I use is Manulife and they don’t even have any on their shelf.
@@K4Financial Yes I was quite pleased when they announced that. My third DB pension is still held by the company and is about 80% funded, so if the company goes under I can expect a 20% cut. Not good but not a disaster. There are about a dozen providers lifeannuities.com/annuity_rates/index.html
Thanks for being awesome!
Thanks for making my day. 😊
What if I live to long and they send a hit man to off me? :)
Solid question. Maybe K4 will start offering protection services as well as retirement planning
I was wondering what your thoughts are regarding using alternate fixed income products outside of bonds considering today's economic climate. I realize the market is due for a correction but I don't want to keep money in bonds if rates don't increase in the next 10 to 15 years. Any suggestions? I like the annuity but is there anything else you would recommend?
Seems like a million dollar question. Hard to know for sure other than to suggest diversity. Some real estate, some bonds, some precious metals, some mortgage backed securities, some equities.
If it goes bad it’s hard to know what will happen and how the rebound looks.
I hold about 15% of my income portfolio in publicly traded Mortgage Investment Corporations and love them. They are the bank alternative mortgage lenders, generally short term of 1 to 2 years, where the borrower is a bit shy of qualifying for a prime bank loan but has property equity. Being short term mortgages taken for "strategic reasons", the interest rates are high, like 5-8%. MICs pay ALL of their net cash flow to their stock holders and pay no corporate income tax. MICs have been around since the 70s. Most are private but there are several that went public, like Atrium MIC (the CEO got tired of having to deal with flurries of redemption requests when markets dropped when Atrium was private), Timbercreek, MCAN etc. Shares are issued at 10$ and tend to fluctuate between $8-12 over the long term. I think of them as a kind of high yield short term bond holding alternative, except the "bonds" are way safer than corporate vapour, being directly secured by (mostly) 1st mortgages in the MIC's portfolio (as opposed to mortgage backed security garbage like in the US). MICs are a great underappreciated investment space in Canada. The subprime debacle I think is a factor, but the Canadian environment is much more conservative.
Thanks John ! I'll do some due diligence and research MIC and see if it fits in my portfolio. Your videos are very helpful and informative.
Great Video Kent and was hoping if you can assist with question.. I believe my company will be downsizing this year and being that i am pushing 60 reality is I will be out. Do you take over DC plans that I can transfer to you form Dejardin? I live in Toronto
We can definitely help with that. Just email us at info@k4financial.ca whenever the time comes and we can discuss your options.
@@K4Financial Excellent thank you very much
Thank you very much, are annuities taxed as an income outside of an RRSP or are they taxed like dividends.
Interest income. If you check the Sun Life calculator I talked about it shows about how much tax you would expect, but most people have a hard time knowing what their tax rate in retirement will be.
@@K4Financial Thanks.
Is Sunlife the only company that offers annuity. How about manulife?
@@fanfancheong SunLife isn’t the only one, but I’m not sure who else does. Manulife doesn’t
Great video.
I have a lot of rsp's coming due this year (I'm only 60 so I need to re-invest for now), I've always been safe, gic's and a little in the stock market.
GIC's are paying under a percent, what would you suggest would be good investments during these crazy times?
The highest gic I could find is 10 year @ 1.25%... crazy!!
I wish I knew. All I can say is that sticking to the fundamentals has always been the best course. Since you’re conservative you could invest in a conservative portfolio that is professionally built and well diversified. Over the course of your retirement, that would likely be the best bet for you. Locking in a 10 year GIC at 1.25% basically guarantees that you’ll lose money to inflation.
Index funds, as an ETF. You get almost guaranteed gains, and dividends. NASDAQ as well as TSX. No brainer