The concern: You’ve set aside money to fund your retirement and want to ensure you have enough. But you also need income now.
The solution: You can benefit from the immediate, guaranteed income of a term certain annuity combined with the power of annual resets and income deferral benefits from Sun Lifetime Advantage Guaranteed Investment Fund (GIF). Together, they can provide income for you now while your future lifetime guaranteed income grows.
Sun Lifetime Advantage GIF can help you plan for your retirement income stream and works for a wide range of situations, such as:
- business owners or farmers selling their business, land, property or farm, or
- people receiving money from an inheritance or other circumstance.
Joe has decided to retire from farming at age 60. He sold his farming business for $1 million and needs a sustainable plan to provide income for the rest of his life. Joe’s advisor suggested two steps to help him retire with confidence.
Joe uses $500,000 from the sale of his farm to buy a term certain annuity for 15 years. It will provide $40,2171 in annual income.
1 Term certain annuity. Prescribed taxation type. Income rates as of February 1, 2019.
Joe wants to take advantage of potential market gains and income deferral benefits to boost his retirement income as he gets older. His advisor recommends he puts the other $500,000 into a Sun Lifetime Advantage GIF contract.
Because the 15-year term certain annuity is providing Joe an income, he doesn’t need to touch his Sun Lifetime Advantage GIF investment.
It grows because:
- he defers taking income from this contract, and
- resets will capture a blend of positive market performance and potentially rising interest rates.Because Joe’s Sun Lifetime Advantage GIF contract grew over the first 15 years of his retirement, it can provide him an annual income of $55,302 – an annual increase of $15,085 or $1,257 each month. This additional income is extremely valuable for Joe as he gets older. He can put additional money aside for unplanned medical expenses or other emergencies.
- When Joe’s term certain annuity ends, he can start drawing an income from the Sun Lifetime Advantage GIF contract to continue funding his retirement.
You can start taking lifetime guaranteed income from a Sun Lifetime Advantage GIF contract at any time, but the longer you wait, the more it grows. No matter what you decide, you’ll receive guaranteed income for life.
Waiting is powerful
The beauty of this strategy is the flexibility Joe has – if he wants to, he can begin to supplement his term certain annuity income at any point by electing income from his Sun Lifetime Advantage GIF contract.
Here’s an example of how Joe’s lifetime guaranteed income grows with Sun Lifetime Advantage GIF2.
Fixed income returns reflect the historical returns of 60% of the FTSE TMX Canada Long Term Bond (%Total Return) and 40% FTSE TMX Canada Canadian Treasury Bill 91 Day (%Total Return). Equity returns reflect the historical returns of 60% of the S&P/TSX Composite Index and 40% of the MSCI EAFE Index. Historical returns are based on actual equity and fixed income returns during this period. Returns are for illustration purposes only and are not indicative of actual or future fund performance. Current income rate scenario assumes that the current income rates do not change. Based on income rates as of February 1, 2019.
2 The market value shown reflects historical returns from 1992-2016 with 60% allocated to equity funds, and 40% allocated to fixed income funds. Annual returns used are net of a fund MER of 3.85%. Current income rate scenario.
If Joe had elected income from the Sun Lifetime Advantage GIF contract right away, he would have received $16,650 annually. However, the immediate income from his term certain annuity is higher, and his final lifetime guaranteed income from Sun Lifetime Advantage GIF is even higher.
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. Sun Life GIFs are individual variable annuity contracts issued by Sun Life Assurance Company of Canada, a member of the Sun Life Financial group of companies.