I’ll bet when you took that annuity you wondered which direction interest rates were going and if it was the right thing to do at the time. Have you taken a look to see how much pension income the surviving spouse will receive? Will it be enough? If it is do you need the security of an annuity? If yes, then an annuity may be a good option.
Have you factored your home equity into your future income needs and investment allocation? If you sell at some point will you have additional money to invest and supplement your travel and other expenses?
If you see your home as part of the safety allocation in your investment portfolio would you be comfortable continuing to invest in your stock portfolio?
How much money do you draw annually from your tax-free savings account (TFSA) and registered retirement income fund (RRIF)? Focus on securing that money for a fixed number of years.
Types of annuities in Canada and their monthly payouts
As you mentioned, you can secure your travel money with an annuity. Here are the different payouts for various annuities using the $180,000 RRIF, assuming your wife holds the RRIF, and the single annuities are based on her life.
|Type of annuity||Monthly payment|
|Life annuity, no guarantee||$1,240|
|Life annuity, 10-year guarantee||$1,153|
|Term certain to age 90||$1,138|
Flexibility for older Canadian investors
The problem with an annuity in a RRIF is that it always pays out a taxable income. What if some years you don’t travel and don’t need the money?
In your situation, it’s better to keep excess minimum RRIF payments in the RRIF if you don’t need them, rather than draw a little extra to make a TFSA contribution. If you had children it may be different.
You say you don’t like bonds, but what about guaranteed investment certificates (GICs)?