Which is Better: A RRIF or an Annuity? - Empire Life

Which is better: a RRIF or an annuity
Table D:
Which is Better for Me — A RRIF or an Annuity
RRIFs
Annuities
The Basics
Advantages
Disadvantages
A RRIF is basically an extension of an RRSP, with
some important differences:
• Once you have converted an RRSP to a RRIF, you
cannot make further contributions.
• You must make withdrawals, subject to prescribed
minimums, every year for the rest of your life or
until all the funds in your RRIF are withdrawn.
• Income payments from a RRIF, including any
additional unscheduled withdrawals are taxable
income in the year received.
• You retain personal control of your investments.
• You can change the amount of your income.
• You can make lump sum withdrawals at any time.
• You may outlive your RRIF income.
• Your capital may diminish more quickly than
planned because of lump sum withdrawals or
poor investment performance.
• Your RRIF requires continuing investment
management decisions.
An annuity can provide set income payments for life
or over a specific term:
• In the case of an annuity, you are purchasing
a contract. In exchange for a one-time deposit,
you receive set guaranteed income payments
over a fixed period of time or your lifetime with
or without a minimum guarantee period.
• The amount of income you receive depends on
a variety of factors such as the deposit amount,
current interest rates, age and the type of annuity
you choose.
• The full amount of the annuity payments are
taxable income in the year received.
• A life annuity guarantees that you cannot outlive
your income.
• Neither you nor your spouse are required to make
any investment or management decisions — the
insurance company assumes the investment risk.
• You can spend every income payment without
worry because your future income is guaranteed.
• Most annuities cannot be surrendered or altered
after income has commenced.
• Payments cannot be adjusted to reflect
changing needs.
Seek Unbiased Advice
If you decide that a registered annuity might be a good idea, then ensure you consult someone who sells both
annuities and RRIFs, otherwise, you may get only part of the story. RRIFs are sold by most, if not all, financial institutions
but life annuities (where the income is guaranteed for your lifetime regardless of how long you live), are available only
from life insurance companies. You may feel that you’re not likely to live beyond age 90, but why take the chance
A life annuity guarantees that you cannot outlive your income. Annuities provide set income payments for life.
The information in this document is based on the facts as presented. Any differences, including factors such as assumed growth rates, age, marital status, type and/
or source of income can change the information provided in the various tables dramatically. In addition, this document may not be complete in any explanation of
applicable tax rules as they apply to your personal situation.
Past performance is no guarantee of future performance. The information in this document is for general information purposes only and is not to be construed
as providing legal, tax, financial or professional advice. The Empire Life Insurance Company assumes no responsibility for any reliance made on or misuse or
omissions of the information contained in this document. Please seek professional advice before making any decision.
A description of the key features of the individual variable insurance contract is contained in the Information Folder for the product being considered. Any amount
that is allocated to a segregated fund is invested at the risk of the contract owner and may increase or decrease in value.
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ENG-02/13