Find the Best Annuity Rates In Canada.

Annuities are great way to create a stream of guaranteed lifetime retirement income if you're looking for fixed income.  Your annuity rates and income are are steady for the period you buy them.

Annuity rates in Canada

Annuity basics

Annuity Rates 101

  • What is an annuity?
  • Types of Annuities
  • Best tips to buy annuities in Canada
Find annuity rates Toronto

When it comes to getting the best annuity rates, there is no one size fits all solution. A lot depends on how much guaranteed income you are looking for, when you need it and how much you want to put towards the annuity contract. Depending on your retirement income needs and situation, you may need 20% or maybe 40% of your retirement nest-egg to give you the income you need.

You may need a short term solution like income for 10 years or lifetime coverage. Regardless, your annuity rates all depend on the nature of your situation and need for retirement income. 

The Basics

The best way to understand annuities is to think of them as the opposite of life insurance. While life insurance is meant to protect or insure your family in the event of your premature death, an annuity is meant to protect you or insure your retirement in the event you live too long. Simply put, you buy life insurance because you will die too soon and you buy annuities because you worry about running out of money due to long life.

  • what is an annuity?

  • types of annuities

  • best tips to buy annuities

Annuity is like a pension

Similar to coveted public pension plans that provide iron-clad guarantees, annuities provide individuals with a regular stream of income for life. Unlike GICs, the amount you receive is not dependent on interest rates and unlike equities, there is no worry of volatility in prices.  While a rise in stock market prices protects against inflation better than GICs and interest rates, annuities also provide protection against inflation through indexing.  The nice thing about buying an annuity is that it's a one-time purchase giving you a lifetime of guaranteed payments. You also won't have to worry about fluctuating GIC rates.

Best annuity rates in Canada

Are you living a "just-in-case" retirement?

Are you worried about running out of money and keeping money in a bank account just in case you run out of money or perhaps you need money for medical expenses? Just in case you don't have enough to leave an inheritance to your loved ones, are you not living the retirement you always dreamed of and wanted?  Annuities are a great way to take away the anxiety of living a just-in-case retirement.  We can help you find the best annuity rates to suit your lifestyle and income needs. GET AN ANNUITY QUOTE BELOW.

How to use an annuity in retirement

2 Key Questions To Ask Yourself Regarding Retirement

Most people and particularly those nearing or in retirement can tell you how much money they have in their portfolio. The problem, however, is that most can't tell you how much they can get from that nest-egg.

It's important because retirement is when you replace the income you've made during your working years with the nest-egg you've built up.

What this guaranteed income will help you do is remove the key retirement risks namely:

  • Stock market risk
  • Risk of living too long
  • Risk of withdrawing your assets too quick
  • Risk of not having enough time to recoup market losses
  • Risk of inflation

The success of your retirement planning will NOT depend on your assets or how big your nest-egg is.

  1. 1
    How much guaranteed lifetime income do I have or need?
  2. 2
    Have I removed or addressed the key retirement risks?

Make sure to cover basic expenses in your retirement plan

When working with a retirement planner one of the most important things to address is how you will comfortably cover the expenses you need to live out your retirement. Most people focus on accumulation in pre-retirement years but most retirement planners don't focus on the equally important distribution phase once you stop working. The best way is to use an annuity whereby you convert a portion of your nest-egg to meet this need. The image shows what to consider and how to think about covering all aspects of your retirement plan.

Retirement planning Canada
  • Calculate what you'll get from CPP/OAS and employer pensions.
  • Determine if there is a shortfall to cover your basic expenses based on what your number is.
  • Use a portion of your nest-egg to buy some form of guaranteed income for the amount of shortfall.
Retirement Planner Toronto

Get An Annuity Quote

  • An annuity can be bought using a portion of your nest-egg, e.g. 25%, to create a guaranteed income stream.
  • Annuities are typically used to cover your fixed basic living expenses in retirement for life.
  • An annuity is insurance in case you live too long and risk running out of money.
  • Greatest risk in retirement is longevity risk...the risk you'll live too long. Annuities take away this risk.
  • Get a quote and Blue Alpha Wealth will review your options with you, no obligation.

Annuities from top life insurance companies

Province
  • Province
  • Alberta
  • British Columbia
  • Manitoba
  • New Brunswick
  • Newfoundland & Labrador
  • Nova Scotia
  • Northwest Territories
  • Nunavut
  • Ontario
  • Prince Edward Island
  • Quebec
  • Saskatchewan
  • Yukon
How Long Do You Need Guaranteed Income For?
Lifetime Income
  • 5 Years
  • 10 Years
  • 20 Years
  • Lifetime Income
When Would You Like Income To Start?
Immediately
  • Immediately
  • Next Year
  • 5-10 Years From Now
Account Type
Non-Registered
  • RRSP
  • RRIF
  • Non-Registered
  • Registered Pension Plan 
  • Locked In Retirement Account (LIRA)
  • LIF/LRIF
  • DPSP
Deposit Amount
Primary Person
Gender
  • Gender
  • Female
  • Male
Secondary Joint Person (OPTIONAL)
Gender
  • Gender
  • Female
  • Male
By submitting this form I confirm that my information is accurate

Do You Have A Defined Contribution Pension?

Transferring Your Defined Contribution Pension to An Annuity

A Defined Contribution (DC) Plan is a type of Group RRSP workplace pension plan most commonly used in Canada. It allows the employee to save for retirement through payroll deductions with the hope that it helps the employee save for retirement. Typically an employer matches a percentage of the contribution and in some cases they may not. The main difference between a defined contribution pension plan and defined benefit plan is the responsibility for the success of the plan to fund your retirement.

Why you should consider transferring your DC Pension Plan to an annuity:

  • When you retire you have to find a way to create an income stream from your DC pension.
  • It allows you to create a personal pension using a portion of the funds to cover basic expenses in retirement.
  • It mimics a defined benefit pension plan by defining exactly how much money you will get a month for life.
  • It ensures you don't run out of money by taking away the responsibility from you to seek out good consistent returns.
  • Your money will not be subject to market risks.

The happiest people in retirement are those who have some kind of pension-like income.

CPP and OAS Guidelines

What to consider before taking CPP payments.

  • Are you still employed and do you need the income?
  • Do you have an employer sponsored pension plan?
  • Are you single or married?
  • What is the value of your RRSPs and other retirement accounts?
  • Have you considered taxes and how adding to your income could mean a higher tax bill?
CPP payments

What is the ideal age to take CPP?

This is a common question retirement planners get from people in the mid 50's going to age 60. In general, you can start collecting CPP payments anywhere between your 60th birthday and 70th birthday. Some might consider taking CPP past age 70 but in reality there is no real benefit in doing so. You qualify for CPP as long as you made at least one payment after age 18. You can apply for the start of payments the month after you turn 59 years old OR up to one year in advance before you know you're going to take it.

CPP vs OAS?

Keep in mind that CPP and Old Age Security (OAS) are two separate payments you receive from the government. OAS is eligible from age 65 to age 70. The most important point is that if you apply for CPP at age 65 you aren't obliged to apply for OAS at the same time and the opposite is true. Each one is separate and you should apply as you see fit for your situation.


How much CPP payment can I expect to get?

The maximum you're allowed can for CPP in 2021 is $1,203 but on average you can expect a payment of about $688. It all depends on your situation. The best way to find out what you qualify for is to create an account or login to My Service Canada here to see your estimate of CPP. 

Do I automatically start getting payments?

You need to apply as the government won't automatically start making payments. Because it's income that is taxable in your hands it's important to plan it out with your retirement planner to see how to tax efficiently apply it to your retirement income plan to avoid such things as OAS clawback. 

Note: It's always important to determine what age works for you and to discuss with a retirement planner like Blue Alpha Wealth. The mistake many people make is basing this decision on what a friend or neighbor did. This is why it's important to understand why you should be taking it at certain ages depending on your situation.

Penalty for taking CPP before age 65?

If you decide to start collecting CPP before your 65th birthday, the amount that you will get will be reduced by 0.60% for every month that you take it early. For example, if you take CPP at age 60, your amount is effectively reduced by 36% (0.60% for 60 months).

For each month that you delay taking CPP after your 65th birthday, you get a 0.70% increase in your CPP payment! This is a 40% increase in your payment if you take it on your 70th birthday.

Taxation of Annuities

Registered Income vs Non-Registered Income Payments

In general, payments or income you receive from a registered annuity are taxed 100% in the year you receive it as an annuitant. In contrast, income or payments you receive from from non-registered account annuities are treated on a non-prescribed (accrual accounting) or prescribed taxation treatment. When you buy an annuity contract from a life insurance company your series of income payments are made up of two components: return of capital and interest income. Your capital portion is not taxed but the interest is taxed and the way its taxed depends on whether you choose "prescribed" or "non-prescribed" taxation at the time of policy issuance.

What Is A Prescribed Annuity?

A prescribed life annuity is a type of annuity that has a fixed or level taxation structure which has the benefit of spreading out your tax burden evenly over the life of the annuity policy. Opting for either prescribed or non-prescribed annuity taxation doesn't affect the amount of income you will receive. It will, however and more importantly, affect your after-tax income calculation.

  • If you choose non-prescribed taxation: the interest income is fully taxed at your marginal tax rate whereby you pay more tax in the beginning then less tax over the years as it tapers off over time.
  • If you choose prescribed taxation of your annuity you will receive greater after-tax savings and benefits. Based on Canada Revenue Agency policy, prescribed annuities receive level taxable income and preferred tax status. Prescribe annuities are unique to non-registered accounts.

In Canada withholding tax is compulsory for annuities purchased with Life Income Fund (LIF), Deferred Profit Sharing Plan (DPSP) and Registered Pension Plan (RPP)premiums. It doesn't matter if the account is locked-in or not locked-in. For non-resident Canadians, the applicable withholding tax rate is deducted for any annuity contract that has been bought.

Who Qualifies for A Prescribed Annuity

In general most people can qualify for prescribed annuities and the tax favored status they receive as long as you can demonstrate the following:

  • You are using non-registered funds.
  • Your annuities income payments are not indexed.
  • You are the owner and annuitant of the annuity policy.
  • You have not deferred/delayed payments beyond December of the following year.
  • Your annuity guarantee period (if you choose) does not go beyond age 90

Perfect Planning is better than Perfect Annuity Rates

Annuities are not a perfect product. Some media outlets and some financial professionals will criticize annuities mainly because they misunderstand how they work and incorrectly compare them to investments.  Annuities are not investments. As a result it confuses consumers.  

Annuities play a distinct role in retirement. They take away longevity risk which is the risk that you'll live too long.  So, rather than focus on the product focus on what the product does. Then plan perfectly!

6 Tips For Finding the Best Annuity Rates

Look at different companies

Don't go directly to an insurance company. Certain companies have different features you may miss out on by sticking with one company. Shop around!

Consider your income objectives