During this time of uncertainty there are some things you can control. It can be difficult not to immerse oneself in negative news; lose perspective that may cause you to make decisions that will negatively affect your future. There could be many worries but it is important to focus on the long term and not just react daily to news. If you are withdrawing income from portfolios, choose carefully where to make the withdrawals - RRIF, TFSA, non registered investments. The government is allowing you to reduce the annual RRIF minimum withdrawal by 25% - this will allow you to withdraw less in 2020 during this period of market declines.
If you are invested in GICs (Guaranteed Investment Certificates) you will notice that renewal rates have dropped. You may wish to consider an alternative to GICs by investing in an annuity that will guarantee your income for the rest of your life. The amount of guaranteed income will depend on the value of your initial investment and your age. You can also guarantee the income for the lifetime of your spousal survivor. You will not be able to access the capital at any time, but the importance of lifetime income cannot be understated. You can also request the payments to be guaranteed for a certain term, such as 15 years. This ensures your beneficiaries will receive payments (for the remainder of term) in the event of your premature passing.
You can take a lump sum of money such as a GIC maturity and invest in a GMWB (Guaranteed Minimum Withdrawal Benefit). If you are not yet retired and do not need the income immediately, you can accumulate wealth before you start withdrawing income. You can start receiving income as early as age 55, and the predictable monthly income is protected from market downturns and will continue no matter how much your investment declines. You bought a GIC for the guarantee, but the only guarantees (principal and current interest rate) last as long as the term you selected, typically 1-5 years. The options outlined offer guarantees for the rest of your life.
If you are age 55 or older and own your home, you could consider obtaining some of your equity in cash through a CHIP (Canadian Home Income Plan). There are no income or medical requirements, you can remain in your home for as long as you wish, and you never have to make a mortgage payment. Talk to an advisor today. Plan for your lifetime.
Carol Plaisier, CFP®, Investment Advisor with HollisWealth, a division of Industrial Alliance Securities Inc., can be reached at the HollisWealth office at 166 E. Island Hwy Parksville or by phone at 250-586-1332, by email at carol.plaisier@holliswealth.com, or online at www.carolplaisier.com.
This information has been prepared by Carol Plaisier who is a Investment Advisor for HollisWealth® and does not necessarily reflect the opinion of HollisWealth. The information contained in this article comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Investment Advisor can open accounts only in the provinces in which they are registered.
HollisWealth® is a division of Industrial Alliance Securities Inc., a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.
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