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.