charting retirement

The possibility of early death prevents many senior men from opting for an annuity.

A life annuity involves paying a lump sum to a life insurance company in exchange for a guaranteed income stream for the rest of your life.

Life annuities have never been popular in Canada, even when payouts were higher than they are now. It seems most retirees prefer to follow a DIY approach, in which they continue to control their investments and decide themselves how much to draw each year as income.

The question I’m exploring today is whether the DIY approach is better than a life annuity.

Consider a 70-year-old male with $100,000 in his RRSP. He could buy a life annuity, with payments guaranteed for 10 years. Or he could follow a DIY approach in which he invests the $100,000

See Full Page