annuity plans for retirement

Annuities Explained: The Ultimate Guide to Retirement Income

Category : Blog

When planning for retirement, ensuring a steady income stream is essential to maintaining your lifestyle and peace of mind. One financial tool that can provide this stability is an annuity. Annuities offer guaranteed payments over time, which can help supplement other sources of retirement income. Understanding how annuities work, the types available, and their potential benefits can be key to securing your retirement future.

What Are Annuities?

An annuity is a financial product sold by insurance companies that provides regular payments over time in exchange for an upfront investment, usually a lump sum. Annuities are often used as part of a retirement plan to ensure a stable income. These payments can begin immediately (immediate annuity) or at a future date (deferred annuity), depending on the type of annuity you choose.

Types of Annuities for Retirement

Several types of annuities cater to different needs in retirement. Below are a few common options:

  1. Life Annuities: A life annuity guarantees payments for the rest of your life. This is ideal for those worried about outliving their savings, as the payments continue as long as you are alive. It can be structured as a single life annuity, which pays only for your lifetime, or a joint life annuity, which continues payments to your spouse after your death.
  2. Term Certain Annuities: With a term certain annuity, payments are made for a specified number of years. This type of annuity is ideal if you need a guaranteed income for a specific time period, such as covering the gap between retirement and receiving government pensions like Old Age Security (OAS).
  3. Indexed Annuities: An indexed annuity increases the payout over time to keep up with inflation. While the initial payments may be lower, they will rise annually, making this option suitable for those looking to maintain purchasing power throughout retirement.
  4. Cash Back Annuities: These annuities guarantee that all of the capital used to purchase the annuity will be returned, either through income payments during your lifetime or as a lump-sum payment to your beneficiary if you pass away before the full amount is paid out. It’s a way to ensure that your investment won’t go to waste.

Benefits of Annuities in Retirement

Annuities are particularly attractive for retirees seeking a predictable income that isn’t affected by market fluctuations. Here are some key benefits:

  1. Guaranteed Income for Life: The primary appeal of life annuities is the promise of regular, guaranteed income for life. This removes the uncertainty of outliving your savings and provides a safety net for your basic living expenses.
  2. Protection Against Market Risks: Unlike investments that are tied to the stock market, annuities offer stable, fixed payments. This can be particularly reassuring during times of market volatility, as you won’t need to worry about losing value in your retirement income.
  3. Tax-Deferred Growth: For deferred annuities, the money you invest grows tax-deferred until you begin to receive payments. This allows your investment to grow without the drag of annual taxes on earnings, making it an effective long-term saving option.
  4. Flexible Payout Options: Annuities can be structured to fit your specific needs. For example, you can choose how long you want to receive payments (for life or a certain period), whether the annuity should continue for your spouse after your death, and whether you want to adjust for inflation through indexed payments.

Canadian Annuity Rates and Retirement

In Canada, annuity rates fluctuate based on factors such as interest rates, age, and life expectancy. Currently, higher interest rates can result in higher payouts, making annuities more attractive in certain market conditions. Annuities can be purchased with registered funds (like RRSPs) or non-registered funds. For those with an RRSP, it’s essential to make an election by the time you turn 71 on how to convert your RRSP into retirement income—either through a Registered Retirement Income Fund (RRIF) or a registered annuity.

Annuities and Tax Considerations

One of the often overlooked advantages of annuities is their potential tax benefits. Non-registered life annuities may allow for some tax-efficient income. Payments from such annuities are treated partly as a return of capital, which is not taxed, and partly as income. This can help lower your overall tax burden, especially if you are in a higher tax bracket.

Moreover, if you are concerned about Old Age Security (OAS) clawbacks due to high taxable income, structuring your income sources with annuities can help you stay below the threshold that triggers these clawbacks.

Beaton Annuity Services: Your Partner for a Secure Retirement

Beaton Annuity Services is dedicated to helping you secure a stable and reliable income throughout your retirement. We offer a wide range of annuity plans for retirement, including Life Annuities, Term Certain Annuities, and Cash Back Annuities, tailored to meet your financial goals. Our experienced professionals work closely with you to simplify the process, ensuring your annuity plan fits your needs. With our expertise, you can enjoy peace of mind knowing your retirement income is guaranteed, tax-efficient, and protected from market risks. Trust Beaton Annuity Services to safeguard your financial future.


Deferred Annuity

Maximize Your Retirement: Key Benefits of a Deferred Annuity

A deferred annuity can be a powerful tool in securing your financial future, particularly as part of a well-rounded retirement strategy. It allows your money to grow tax-deferred, meaning you don’t pay taxes on the interest earned until you start receiving payouts. This makes it a popular choice for those planning their retirement. Let’s explore the key benefits of a deferred annuity and why it might be a smart choice for your retirement.

  1. Tax-Deferred Growth

Any interest, dividends, or capital gains accumulated within the annuity remain untaxed until you withdraw them. This tax-deferred growth can allow your investment to compound more effectively, resulting in a larger nest egg for retirement.

For Canadians nearing retirement age, having the option to postpone taxes until you’re in a lower tax bracket can mean keeping more of your hard-earned money. This makes deferred annuities especially appealing for those who want to minimize taxes on their retirement income.

  1. Guaranteed Income for Life

A major advantage of buying a deferred annuity is that it provides a guaranteed income for life once the payout phase begins. This is crucial for retirees concerned about outliving their savings. Unlike other forms of investment, which can fluctuate with the market, annuities offer a stable and predictable source of income.

For example, once you purchase a deferred annuity, your payments are determined based on your initial investment, your age, and the terms of the annuity. Once those payments start, they are guaranteed to continue for the rest of your life, ensuring that you have a reliable income even if other sources run dry.

  1. Flexible Payment Options

You can choose from a fixed period or a lifetime payment plan. This flexibility makes deferred annuities suitable for various retirement scenarios, whether you want to start receiving payouts right after you retire or delay them until a later stage.

For those unsure about the future, this ability to control when and how you receive your money can be an essential feature, offering peace of mind that you’ll have income when you need it most.

  1. Protection Against Longevity Risk

A deferred annuity mitigates this risk by providing guaranteed income throughout your retirement, no matter how long you live. This helps you avoid the stress of managing investments or worrying about economic downturns that could erode your savings.

In the case of an annuity, you are effectively transferring the risk to the insurance company, which assumes responsibility for making sure you have income for the rest of your life. This reduces your financial anxiety in later years, ensuring your basic needs are always met.

  1. No Investment Management Required

After making your initial investment, the insurance company handles all the behind-the-scenes work. You simply sit back and wait for the payout phase, making deferred annuities a “set it and forget it” option.

This hands-off approach is perfect for those who don’t want to worry about constantly rebalancing portfolios or monitoring the stock market. In uncertain economic times, having a guaranteed, low-maintenance source of income can be extremely reassuring.

Secure Your Future with Beaton Annuity Services

At Beaton Annuity Services, we provide personalized annuity solutions to help you achieve financial stability during retirement. Whether you’re considering Term Certain, Guaranteed Life, Cash Back, Insured, or Indexed Annuities, we work with leading Canadian insurance providers to tailor the best options for you. With over 30 years of experience, John Beaton ensures you receive expert advice and the highest guaranteed income for your investment. Let us help you protect your retirement savings and secure a reliable income stream that lasts a lifetime.


deferred annuity

Why Choose a Single Premium Deferred Annuity for Your Retirement Plan?

While planning for retirement, you should consider various financial products to ensure your savings are managed properly and provide the income you need. The Single Premium Deferred Annuity (SPDA) is one of those products. Such annuities offer different benefits and can be a great option for many retirees. This guide will help you know why a Single Premium Deferred Annuity might be the right choice for your retirement plan.

What is a Single Premium Deferred Annuity?

A Single Premium Deferred Annuity is a financial product where you make a single lump-sum payment to an insurance company. In return, the insurer promises to provide you with a stream of payments starting at a future time according to the date you choose. The term “deferred” means that payments don’t begin immediately but are scheduled to start at a later date. It is usually many years after the first investment.

  1. Guaranteed Future Income

SPDA can be a guaranteed future income for you. Investing a lump sum now can help you secure a predictable income stream for a future date. It can be particularly beneficial for retirement planning, as it provides financial security and helps mitigate the risk of outliving your savings.

  1. Tax-Deferred Growth

The money you invest in an SPDA grows without being taxed until you start receiving payments. This can be a powerful way to build your retirement savings, as your investment has more time to grow and compound.

  1. Flexibility in Income Start Date

There is flexibility in choosing when you want to start receiving payments. You can choose to begin receiving income at any future date, which allows you to align the annuity with your retirement plans or other financial needs.

Considerations When Choosing an SPDA

  1.   Terms and Conditions

Before purchasing a Single Premium Deferred Annuity, you should understand the terms and conditions. Ensuring you fully understand these details will help you make an informed decision and avoid any surprises in the future.

  1. Assessing Your Financial Goals

Evaluate your overall financial goals and how an SPDA fits into your retirement strategy. Consider factors such as your desired retirement age, other sources of income, and your long-term financial needs. An SPDA should align with your goals and provide benefits that match your specific retirement plans.

Explore SPDA with Beaton Annuity Services!

A Single Premium Deferred Annuity can be a valuable tool in your retirement planning strategy. With guaranteed future income, tax-deferred growth, and flexible income start dates, an SPDA provides a secure and predictable way to enhance your financial stability in retirement. Beaton Annuity Services offers one of the best annuity solutions to ensure a stable and secure income for your future. We will guide you through choosing the right annuity—whether Fixed, Single Premium Deferred, or Immediate annuity according to your retirement objectives and financial requirements. Reach out to Beaton Annuity Services today and start building a worry-free retirement plan!


life insurance annuity

What is a Life Annuity and How Can It Benefit Your Retirement?

Category : Blog

As you approach retirement, planning to manage your savings and convert them into a steady income stream becomes increasingly important. One popular option is a life annuity, which provides a guaranteed income for the rest of your life. This blog will explore what a life annuity is, how it works, and how it can benefit your retirement, particularly for Canadians navigating their retirement planning.

What is a Life Annuity?

A life annuity is a financial product sold by insurance companies that guarantees a steady income for the rest of your life in exchange for a lump-sum payment. The main purpose of a life annuity is to eliminate the risk of outliving your savings by providing a predictable income, regardless of how long you live.

Once purchased, a life annuity offers a “no-maintenance” solution—there are no ongoing decisions about investments or withdrawals. It ensures you receive regular payments (monthly, quarterly, or annually) for life.

The Importance of Retirement Planning and Income Stability

In Canada, as in many other countries, the government provides a basic level of retirement income through programs such as the Old Age Security (OAS) and the Canada Pension Plan (CPP). However, these government benefits may not be enough to cover all your retirement expenses. If you have saved in an RRSP (Registered Retirement Savings Plan), you’ll also need to decide how to convert those savings into a regular income once you retire.

By the time you turn 71, you’ll be required to either transfer your RRSP into a Registered Retirement Income Fund (RRIF) or purchase a life annuity. The RRIF allows more flexibility, including the ability to withdraw lump sums in emergencies, but a life annuity can provide stability and peace of mind by ensuring that basic living expenses, like housing and food, are always covered.

How Life Annuities Help Protect Your Retirement?

One of the key benefits of a life annuity is the guaranteed lifetime income it provides. Once you purchase a life annuity, you don’t have to worry about investment risks, economic downturns, or making difficult financial decisions later in life. Here are some additional advantages:

1. No Risk of Outliving Your Savings

As life expectancy increases, more retirees face the risk of outliving their savings. A life annuity provides a solution by ensuring that you will continue receiving payments for the rest of your life, no matter how long you live.

2. Predictable Income

With a life annuity, you don’t need to worry about market fluctuations or managing investments. Your income is predetermined and stable, which can ease the anxiety associated with financial planning in retirement.

3. Tax-Deferred Growth

If you purchase a life annuity with funds from your RRSP, you can enjoy tax deferral until the income has to be paid out. This can be particularly beneficial if you have substantial savings, as it allows your investment to grow without the immediate tax burden.

4. Eliminating the Need for Complex Decisions

With a life annuity, you don’t have to make any more decisions about your investments. The income is automatic and consistent.

Canadian Annuity Rates and Government Programs

Canadian citizens have specific options when it comes to life annuities. Canadian government benefits like Old Age Security (OAS) and the Canada Pension Plan (CPP) offer basic retirement income, but they are often not enough to cover all living expenses. Annuities are available to supplement these programs, and their rates vary based on factors like age, health, and current interest rates.

Canadians with RRSPs must convert their savings into an RRIF or a life annuity by the end of the year they turn 71. This choice gives flexibility, allowing retirees to decide whether they want more control over their income through a RRIF or guaranteed payments through a life annuity.

Advanced Life Deferred Annuity (ALDA) – A New Option

In 2024, Canada introduced the Advanced Life Deferred Annuity (ALDA), allowing individuals to defer taxable income from their registered funds, such as RRSPs and RRIFs, until age 85. This option is particularly valuable for those who wish to reduce their required withdrawals in their 70s and defer some income for later in life. The ALDA allows up to 25% of registered funds, to a maximum of $170,000, to be allocated to this annuity.

Conclusion: A Life Annuity as Part of Your Retirement Plan

A life annuity offers stability, predictability, and peace of mind in retirement. It ensures that you will receive income for life, even if you live beyond your expected years. For those with substantial retirement savings, a life annuity can also protect against market risk and the uncertainty of managing finances in later years. In Canada, life annuities can be used in conjunction with government benefits and RRSP savings to create a reliable retirement income strategy.

At Beaton Annuity Services, we specialize in helping you achieve financial security through tailored life annuities. Our team provides personalized solutions designed to ensure a steady, reliable income for the rest of your life. With a range of options, including fixed-term, guaranteed, and insured life annuities, we help you choose the best fit for your retirement goals. Trust Beaton Annuity Services to guide you through the complexities of annuities, offering peace of mind and a secure financial future. Contact us today to start planning for a worry-free retirement.


ALDA – A NEW Tax Deferral To Age 85 Annuity

Category : Uncategorized

ALDA is the acronym for the Canadian Advanced Life Deferred Annuity. Now you are able to use this annuity to defer registered taxable income to your age 85.

ALDA was touted by the government in 2019 as the biggest change in Canadian retirement planning in quite some time. An ALDA, specifically designed for registered funds was projected to be available starting in 2020. The reality is, Canadian insurance companies did not rush to embrace ALDAs, and it wasn’t until December 2023 that the first ALDA became available.

ALDA is a Canadian Government approved life pay annuity that allows individuals to defer part of unlocked registered funds such as registered retirement savings plans [RRSP], registered retirement income plans [RRIF] and deferred profit-sharing plans [DPSP] up to the age of 85.

ALDA permits an individual to defer up to 25 per cent to a maximum of $170,000 [2024] of an individual’s aggregate registered investment accounts to be used to purchase an annuity that begins payments at the very latest by the end of the year in which they turn 85. Going forward, ALDA limits are indexed to inflation. ALDA purchases are rounded to the nearest $10,000.

ALDA withdrawals are fully taxable, and upon death any remaining funds in such an account would become fully taxable to the owner’s estate. Alternate beneficiaries could trigger a qualified transfer of registered funds if made to surviving spouse, common law spouse or financially dependent child or grandchild. Any subsequent withdrawals in their hands are fully taxable.

Traditionally, owners of RRSPs must elect before the end of December of their 71st year of age and choose which investment vehicle they intend to use to begin periodic withdrawals from their registered investments. The choices are to simply de-register their plan and pay tax on the lump sum received, a registered retirement income plan or a registered annuity.

An ALDA could be an important option for the right retiree. For those retirees with significant registered savings, being able to defer up to 25 per cent of those savings up to age 85 would reduce minimum required RRIF withdrawals during one’s 70s up until age 85 when the ALDA would start. After this deferral period, annuity payments are guaranteed payable for life.

There are no fees for an ALDA. Full purchase price is returned if death takes place before the first payment. After first payment, death triggers a return of the difference between purchase price and payments received.
Obtain a free ALDA quote by reaching out to annuity broker, John Beaton at john@annuitybrokers.ca.


How much does a $100,000 annuity pay?

Category : News

Our accumulated data for the year 2023 to date from annuity market surveys reveals that $100,000 non-registered Canadian funds used by a male age 65 to purchase a single life pay annuity with a 10 year guarantee period would receive between $527 and $578 monthly for the rest of his life. If that same male was 75 years of age at time of purchase, he would receive between $646 and $728 per month for the rest of his life. Payments commence in one month from purchase date. Payments must be paid to the annuitant during the guarantee period whether or not the purchaser is alive or dead. If you would like to know how much an annuity would pay to you go to Get a free Quote right now.


How annuities can be used to deter unexpected retirement hardships

Category : Uncategorized

In today’s world, you will inevitably encounter swindlers and scammers who will test you and determine quicky whether or not they can exploit you financially. If it’s determined that you are an elderly person, these trickers assume that you likely have sufficient savings that they can steal, and they will think endlessly of ways to get their hands on it. You may already know someone who has fallen victim to scam phone calls or “get rich quick” schemes.

Scammers and swindlers are not the only robbers that elderly folk face when it comes to their finances. You must be aware that, presumably, there are two other bandits hiding in your future and they are preparing to slip undetected into your life and remain undetected until they steal your independence and ability to maintain financial security. These bandits are dementia and Alzheimer’s disease. Statistics indicate that nearly a quarter of North Americans over the age of 65 experience some form of diminished mental capacity, putting them at risk for poor financial decision-making and exploitation.

Additionally, you could encounter pressure from your adult children or grandchildren to help solve their financial needs. Ever been asked to co-sign a loan? It is difficult to say no to your own, but you must consider the impact it could have on your own future needs. Putting the needs of your children ahead of your own while you are entering – or are already in your retirement stage of life may cause you to run out of the money needed to support yourself.

Lastly, other family members or well-meaning friends may urge you to devote your money to a hot, “can’t lose” investment, helping you to augment your retirement income.

Any of these issues can derail your retirement income. When you provide some of your retirement funds to others as a loan or gift, you need to make sure you can afford to use those funds for that purpose.

Insulate yourself against all the above by turning some of your retirement savings into an annuity sufficient to provide level and stable long-term guaranteed income to cover your basic needs for the future. Then, if you want to help your children or allot part of your income into that hot investment, you can do so without worrying about your own financial well-being. As you know, lifelong annuities pay for your lifetime and cannot be cashed out. In any event, get expert advice before transferring funds out of your control.


How does a Guarantee Period Impact an annuity?

Term Certain Annuities pay for a specific period of time. Life Annuities pay for a lifetime. So the annuity guarantee period varies.

Term Certain Annuity Guarantee Period

For a term certain annuity the guarantee period is the length of time that payments are made. For example, a term certain annuity for 10 years has a guarantee period of 10 years. It means that this term certain annuity pays for a term of 10 years. After ten years the annuity expires with no further benefit.

The same rules apply for any length of term of payment, whether the guarantee period is 5 years or 7 years or 20 years, etc. A term certain annuity has no mortality calculations, nor is consideration given to a person’s age or gender. A term certain annuity simply pays for a stipulated period of time and it is finished. If you die before all payments have been made, then the remaining payments can be paid to a named beneficiary.

annuity guarantee periodSo, a guarantee period as it applies to all annuities is a set period of time during which the insurance company issuing the annuity must make payments to the person[s] receiving payments, whether or not that person[s] is alive or dead. What if the person[s] receiving the payments dies before the guarantee period is completed? In that case the remaining payments can be directed to a named beneficiary.

Life Pay Annuity Guarantee Period

Life pay annuities on the other hand, pay for as long as a person lives. When a guarantee period of more than 0 years is applied to any life pay annuity there is a change in the lifetime payment amount. These include a single life annuity, a joint life annuity, an indexed life annuity, a registered annuity, a non-registered annuity, a prescribed annuity, or a non-prescribed annuity. For non-registered life annuities there is also a change in taxable portion of income. All payments made within the guarantee period must be paid whether the person receiving payments is alive or dead.

The Best Payout Rates

In its simplest form a life pay annuity would have a 0 year guarantee period in order to take advantage of a person’s age, gender, mortality calculation and any possible mortality credits. When we are searching the Canadian annuity market for the best payout rates, there is a reason for us to do at least one of our searches with a 7 year guarantee period for a non-registered life annuity and a 5 year guarantee period for a registered life annuity because sometimes the best payout rates are posted by insurance companies that have these aforementioned minimum requirements for length of guarantee periods.

An annuity with 0 years guarantee period completes after first payment, upon your death. In the case of a joint life annuity, the joint annuity completes upon the final death of the joint annuitant.


Can an Annuity Protect The Longevity of Your Assets?

Category : News

Strange question to ask? Modern medicine and good eating habits have helped increase the average Canadian’s lifetime. Along with living longer comes the need to have sufficient savings to last for your longer lifetime. It has been my observation that older people begin a process of consolidating their assets by getting rid of things that they no longer need by either selling or simply giving them away and sometimes selling their large home in preparation to downsize to a smaller living space. In or near major Canadian cities, selling a home sometimes results in what looks like a financial windfall. If this happens to you, it likely will be hard to believe that so much money could now be sitting fallow in your bank account. It won’t be long before your bank sales representative calls you to suggest ways to invest this money because, for aggressive bank employees, it’s just too good a sales opportunity to miss. In addition to pressure from your bank to invest, it’s common for close relatives to offer to help you decide what to do with all this money. The odd relative may even suggest that a loan to them or even an outright gift would be timely. Elder financial abuse abounds across this country and even though we are concerned about it, there are still no firm guidelines to protect older Canadians.

So, what puts you in the cross hairs of the opportunist with get richer quick ideas who might want to share in part of the excess funds you have come upon?

You might have:

[a] Sold a valuable home or property in preparation to downsize for retirement.

[b] Won a lottery.

[c] Come into an inheritance.

[d] Sold your thriving business.

[e] The Stock Market has been good to you.

[f] You profited from early involvement in BitCoin.

Maybe it’s time to consider setting aside part of your new found wealth to purchase a guaranteed life pay annuity. Calculate how much locked-in regular income would cover basic needs, such as food, entertainment, maybe even rent and possibly travel. Doing this would remove the temptation for anyone, friends or relatives to take a run at your assets. Now, with your essential needs covered for the rest of your life, you can more comfortably deal with the capital that you have left. Now you might feel inclined to grant occasional gifts or loans to relatives, charitable organizations or friends. Give a telephone call to John Beaton, senior annuity specialist at 1-800-667-8818. He will be happy to hear your story and maybe give you some positive feedback.


Advanced Life Deferred Annuity

Category : News

The 2019 Federal budget introduced the concept of the Advanced Life Deferred Annuity [ALDA]. This product is the biggest change in the Canadian retirement planning landscape in quite some time. Starting in 2020, an Advanced Life Deferred Annuity could be an investment option available to anyone with a Registered Retirement Savings Plan [RRSP], Registered Retirement Income Fund [RRIF], or similar registered plans such as a Defined Contribution pension plan.

Choosing an Advanced Life Deferred Annuity would permit up to 25 per cent of an individual’s registered investment accounts to be used to purchase an annuity that begins payments at the very latest by the end of the year in which they turn 85. There would be a lifetime maximum investment into such a plan of $150,000 that would be indexed to inflation and rounded to the nearest $10,000. Withdrawals from an ALDA would be fully taxable, and upon death any remaining funds in such an account would become fully taxable to the owner unless left to a surviving spouse, common law partner, or financially dependent child or grandchild.

While not necessarily for everyone, an Advanced Life Deferred Annuity could be an important option for the right retiree. For those retirees with significant registered savings, being able to defer up to 25 per cent of those savings to age 85 would reduce minimum required RRIF withdrawals during one’s 70s up until age 85 when the Advanced Life Deferred Annuity payments start. If high registered retirement income has the adverse consequence of Old Age Security clawback, then the Advanced Life Deferred Annuity might solve the problem for you. Look for further announcements about this new retirement annuity proposal.