June 04, 2024

3 guaranteed investment products you need to know about

By Jo Coughlin and Sun Life staff

Thanks to good nutrition and medical advances, Canadians are living longer than ever before. But will our savings last as long as we do?

Today, many of us can expect to live into our 80s or 90s, and some us even into our 100s.

Consider today’s long life spans, economic uncertainty and the prospect of inflation. The need for sound financial planning is more important than ever. Meeting with a financial advisor can help you quantify your longevity risk. And they’ll help you choose investments to guarantee a steady stream of income to meet your ongoing needs. He or she can also recommend certain guaranteed products that have features designed to meet special needs.

Four guaranteed investment products your financial advisor may mention are:

1. Payout annuities

Payout annuities offer a number of benefits:

  • A registered income that can increase each year to help offset inflation
  • A preferential tax treatment for non-registered funds
  • A guaranteed income – ideal for covering day-to-day expenses
  • A choice of receiving payments over a set period or for life

2. Insurance guaranteed investment certificates (GICs)

These are also known as accumulation annuities. Only life insurance companies can offer them. They’re similar in concept to GICs issued by banks. However, insurance GICs offer different guarantees and benefits. That includes allowing you to designate a beneficiary and giving you several estate planning advantages.

3. Segregated funds

Segregated funds are similar to mutual funds.  Segregated funds pool many people’s money and invest that money in stocks, bonds and other securities. The goal is to grow the value of the entire pool, and sometimes provide an income. One difference lies in the benefits they offer when the contract matures, or on your death. Segregated funds guarantee a percentage of your contributions, minus a proportional reduction for withdrawals. They also allow you to choose a guaranteed income.

All these guaranteed products are multi-faceted, so please see a financial advisor for details. And while your investments are the cornerstone of your financial security, here are 3 more ways to stretch your savings:

  • Identify ways to adjust your lifestyle to your income, such as cutting back on non-essential expenditures.
  • Consider downsizing your high-maintenance house.
  • Work part-time or consulting post-retirement. That way, you can earn enough income to pay your day-to-day expenses and keep your savings invested.

Whether you are nearing retirement or already retired, planning ahead can help ensure a sound financial future.

Find out how much income you can get from a life annuity with our annuity calculator.

If you have questions, an advisor can help you decide if an annuity is right for you. And if it is, an advisor can help you choose which one is best to meet your financial goals. Don’t have an advisor?

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