companies and are gaining in popularity due to the recent rise in interest rates . The higher interest rates rise , the better the annuity payment . In annuity arrangements , you convert all , or a portion , of your RRSP to an annuity . A 70-year-old male making a lump sum payment of $ 50,000 at 4 % for a fixed annuity would provide about $ 3,800 annually for the rest of his life ( about $ 3,500 annually for a female ). The payments are guaranteed for life , locked in once you buy the annuity , and require no extra work . One big potential drawback : the funds are no longer available should you need a large lump sum for emergency purposes like a major home repair or sudden medical need . There are several types of annuities , fixed ( as described above ) as well as indexed , variable , and deferred . Professional financial advisor , anyone ?

Some “ new kids on the block ” include variable pool annuities . An insurance company will create age groupings , pooling all the funds of similar-aged members together . The funds are invested with a conservative , long-term focus . Actuaries can ’ t tell who will pass away early or when , but they can predict how many in each category . The pooling of funds spreads the risk over the entire group . If a member passes before they have received the value of their contribution , those funds are returned to the estate . However , any income generated from those funds stays in the pool . Those returns are used to provide income for those who live longer .

Keep in mind that there are income tax implications to every choice . Pension payments , CPP , and OAS are considered income and are therefore taxable . Any funds taken from your RRSP are taxable . Funds transferred from your RRSP into a RRIF or used to purchase an annuity are not taxed , but payments from the RRIF or annuity are taxable income .

How will you harvest your flower garden ?

Ray reminds readers : he ’ s just a simple , gardenvariety retired teacher with an interest in financial matters . Always speak to an advisor before making significant financial decisions .

What do you get for that person in your life who already seems to have it all ?

Why not make a charitable donation in their name ? By donating , you ’ ll be making a difference in the lives of seniors across the province , and you ’ ll be eligible to receive a tax receipt in recognition of your generosity .

Curious about your generosity ’ s impact ?

Visit arta . net / about-artcf to read about how Albertans are benefiting from your donations .

To make a donation , visit arta . net / donate

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